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South Africa: Another Blue Label Share Deal Under Scrutiny
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Business Day (Johannesburg)
27 March 2008
Posted to the web 27 March 2008
Renée Bonorchis
Johannesburg
BLUE Label Telecoms, the recently listed telecommunications company, is now being investigated by the JSE after director Selwyn Diamond sold shares without permission and without reporting the trades to the JSE.
This was Blue Label's third known transgression of the JSE's listings requirements.
News of the sale of shares by Diamond, a director of the Prepaid Company, which is a subsidiary of Blue Label, comes just a week after it emerged his wife had also been trading without notifying Blue Label or the JSE. Furthermore, Blue Label has been listed for only three months and Diamond was given instructions upon listing about how to deal with his shares.
According to the JSE's listing requirements, a director, or an associate of a director, must obtain clearance from the chairman of the listed company before dealing in shares.
Thereafter the director has 48 hours to report the trade to the JSE.
Both Diamond and his wife sold shares the day after Blue Label released its interim results. But with the results out, the company was no longer in a closed period and directors were free to trade. However, they still had to follow the regulatory guidelines.
On February 20, Diamond sold 33126 shares, which would amount to about 5% of his shareholding in Blue Label, according to the company's prospectus. He sold at R8,23 a share and made a profit of R49027.
Gareth Sharp, a spokesman for Blue Label, said yesterday Diamond's trades had emerged during an internal investigation, but he stressed that these shares were not locked in.
Many of the directors of Blue Label own shares in the company that may not be traded until November this year. They are held by a third party.
Sharp said he could not reveal more as the JSE was still investigating the company. He said as soon as there was something more to say, Blue Label would communicate with the market.
The JSE was not available for comment yesterday, but Doug Doel, GM of issuer services at the JSE, said last week he could not recall a case like this before. He said there were a number of penalties the JSE could impose if it decided this was appropriate, ranging from public censure to a fine of up to R5m for the company or the director.
The JSE is expected to make a public statement on the issue today.
Earlier this month, Diamond's wife and the wife of another director, Sean Kaplan, traded shares without permission and without reporting the trades to the JSE.
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On February 20, Diamond's wife sold 335 185 shares at R8,23 a share to make R2,76m. Two days later she bought 82 099 shares when the price was at a low of R7,85, which cost R0,64m. Then, as the share rose, there were another three sales with total gains coming in at R3,18m. Kaplan's wife started selling on February 27 and records show a sale of 266 000 shares for R2,15m on that day.
When Blue Label Telecoms listed in November it placed shares at prelisting prices of between R5,75 and R6,75.
Its share price has lost 13% of its listing value since it opened in November and closed at R7,75 yesterday.
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