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FSB To Interview Suspects In Insider Trading Investigation

The Financial Services Board (FSB) is interviewing those suspected to be involved in insider trading before Pravin Gordhan was fired.

05/05/2017 10:49 SAST | Updated 05/05/2017 10:49 SAST
Sumaya Hisham / Reuters
Former South African Finance Minister Pravin Gordhan addresses a memorial service for anti-apartheid veteran Ahmed Kathrada in Cape Town, South Africa April 6, 2017. REUTERS/Sumaya Hisham

The Financial Services Board (FSB) is going ahead with its probe into insider trading allegations, although it is keeping mum on who is being investigated.

Business Day reported on Friday that the FSB is questioning people thought to have been involved in insider trading in foreign-exchange futures contracts, right before former finance minister Pravin Gordhan was fired.

"We are not in a position to disclose the names of the persons who are under investigation at this stage," FSB market abuse department director Solly Keetse told Business Day, adding that those who were interviewed would do so under oath.

Gordhan was recalled from an international investment road show on March 27 and fired a few days later, sending the Rand 3% lower, according to the paper.

This week, Business Day reported that the probe was underway. It follows an article by Intellidex chair, Stuart Theobald, that pointed to suspicious trades before Gordhan was fired.

Theobald noted that it would be possible to profit from the axing of Gordhan and the subsequent crashing of the Rand "if you knew of such an event in advance".

"It is not clear whether there are any clear laws that would have been violated. It is obviously highly unethical, as it basically profits from someone else's ignorance in that you have information they don't. And let's not even ponder the political implications of a politician giving information to people prior to major market-moving announcements. But insider trading rules are currently focused on company shares rather than foreign exchange.

"This was technically a derivative being traded on the JSE, so it may be covered by insider trading rules for that reason, but if its just treated as a currency exposure, there may be a gap in the regulations through which these traders could slip," he wrote.

The FSB said it was following up on a report by the Johanessburg Stock Exchange (JSE) who reviewed the trades as a matter of routine.