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South Africa: Blue Label Breaks JSE Rules Yet Again
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Business Day (Johannesburg)
2 April 2008
Posted to the web 2 April 2008
Renée Bonorchis
Johannesburg
BLUE Label Telecoms' share price plummeted 5% yesterday when it announced another breach of the JSE's listings requirements had been discovered.
Graeme Prosser, a director of Blue Label subsidiary The Prepaid Company, is the fourth to have contravened the requirements. On November 14, the day Blue Label listed, Prosser bought 227000 shares at R8,81 each. It cost him close on R2m. Those shares have since lost R320 200 in value.
The problem with this trade was not that Prosser was not allowed to buy stock -- it was an open period. The discrepancy was that he did not, as the JSE requires, get clearance to trade from a director at Blue Label and did not report the trade to the JSE within 48 hours.
Gareth Sharp, spokesman for Blue Label, was unable to comment broadly yesterday but said that "to the best of Blue Label's knowledge the company has identified and made public any and all breaches of the JSE's listings requirements".
The JSE has been investigating Blue Label directors' dealings for the past four weeks. It started when it was discovered the wives of directors Sean Kaplan and Selwyn Diamond traded stock immediately after interim results in February.
When Diamond and Kaplans' wives traded, it was an open period, but again clearance was not obtained from Blue Label, and the JSE was not notified. Just a week after this news broke, Blue Label said Diamond himself had traded without clearance.
Diamond and Kaplan also work for The Prepaid Company. Their fellow directors include Brett Levy, Sidney Ellerine, Mark Pamensky, Dean Suntup and Herbert Theledi.
Yesterday Blue Label put out what it called a "voluntary announcement". It said the JSE's investigation was continuing and the company and its executive management team were co-operating fully.
Investec, Blue Label's sponsor, could not be reached for comment. It is incumbent upon the sponsor to guide the directors of a newly listed company when it comes to share dealings. Mark Levy, joint CE of Blue Label, said two weeks ago that all directors had been given instruction as to how to deal with their stock.
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Despite this, directors did not follow instructions and it was not merely a case of spouses mistakenly trading for their own accounts, as Levy first suggested. The stock closed 35c weaker yesterday at R7,40.
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