Markus Jooste and Others Faced ZAR 241 Million Fine for Insider Trading in South Africa
The Financial Sector Conduct Authority (FSCA) in South Africa imposed hefty fines totaling over ZAR 241 million on Markus Jooste and three other individuals for engaging in insider trading with Steinhoff International Holdings NV (Steinhoff) shares in November and December 2017.
Penalties for the Offenders
- Markus Jooste: ZAR 161 million for disclosing inside information and encouraging others to sell Steinhoff shares, as well as dealing himself while in possession of inside information.
- Dr Burger: Approximately ZAR 3 million for dealing on behalf of others.
- Mr Swiegelaar: ZAR 18,000 for dealing for himself.
- Ocsan Investment Enterprises Proprietary Limited: ZAR 115 million.
These decisions can be appealed through the Financial Services Tribunal and serve as warnings against the dangers and consequences of trading on insider information.
What is Insider Trading?
The FSCA defines Insider Trading as:
“specific or precise information obtained or learned as an insider that has not been made public and which, if it were made public, would be likely to have a material effect on the price or value of any security listed on a regulated market or any derivative instruments related to that security.”
According to the Financial Markets Act (FM Act), insider trading includes:
- Dealing directly or indirectly, or through an agent for one’s account or another’s account while in possession of the inside information.
- Encouraging or influencing someone else to deal based on insider information.
- Being in a position to access inside information by employment, office, or profession designates one as an “insider.”
Background
Jooste and others had faced charges of insider trading between November 2017 and January 2018, when Steinhoff revealed financial irregularities amounting to approximately ZAR 15 billion. The FSCA used comprehensive powers under the FM Act to investigate the case.
Previous Penalties for Insider Trading in South Africa
The FM Act imposes administrative penalties, criminal charges, and civil liability for offenders. Administrative penalties can exceed multiple times the monetary benefit derived from insider trading. A juristic person, such as a company, may also commit and be held liable for insider trading offenses.
Previous Penalties for Insider Trading in South Africa
- 2017: ZAR 350,000 plus costs
- 2016: ZAR 467,388
- 2016: ZAR 850,000
- 2014: ZAR 14,152
To avoid hefty fines and reputational damage, individuals must understand the definitions and implications of insider trading and ensure compliance with the FM Act. Those who may be considered insiders must exercise caution in their dealings to prevent any potential breaches.