Johannesburg — A MAXIMUM fine of R100000, some form of private censure and a slap on the wrist were what three directors of Blue Label Telecoms received from the JSE late yesterday after four cases of share dealings not being cleared by the company nor reported to the JSE timeously.

Selwyn Diamond, a director at Blue Label's subsidiary, The Prepaid Company, faced the most severe censure. He was fined R100 000 for him and his wife having traded in Blue Label stock without following procedure. But R60 000 of that fine is suspended for 12 months.

The JSE said any further breaches of its l istings r equirements by Diamond would result in the suspended fine becoming payable immediately, and possible further action.

But John Burke, head of listings at the JSE, said yesterday that the suspended penalty implied that if Diamond did not transgress the listings requirements again in the next year, he would get off with a fine of R40000. This would be less than the profit Diamond made from the originally unreported sale of his shares.

The problem with Diamond arose on February 19, the day after Blue Label released interim results. While it was no longer in a closed period and directors were free to trade, they had to follow the regulatory guidelines. According to the JSE's l isting r equirements, a director must obtain clearance from a designated director of the listed company before dealing in shares. Thereafter the director has 48 hours to report the trade to the JSE.

But on February 20 Diamond sold 33126 shares at R8,23 a share for a profit of R49027. On the same day Diamond's wife, who did not have to obtain clearance to trade but should have been informed of her trading obligations in writing by her husband, sold 335185 shares at R8,23 a share to make R2,76m.

Two days later she bought 82099 shares when the price was at a low of R7,85, which cost her R0,64m. As the share price rose there were another three sales with total gains coming in at R3,18m.

The JSE said yesterday that it had told Diamond of its disappointment with his conduct.

The two other erring directors of The Prepaid Company, Sean Kaplan and Graham Prosser, were not fined but were privately censured. Prosser dealt in shares when Blue Label listed in November and Kaplan's wife dealt in shares in February. She sold on February 27 and records show a sale of 266000 shares for R2,15m on that day.

Burke said while he could not reveal details, private censure could include asking a director to "tell us what they're doing, and the JSE telling them not to make the same mistakes again".

"Generally the JSE hasn't fined someone when they have been privately censured," said Burke.

Blue Label, which sells telephone services in the prepaid market, said yesterday that none of the directors would be fired although they had "caused damage and embarrassment to Blue Label and its stakeholders and require censure in the form of a reprimand from the board".

The listed company, which has lost more than 18% of its value since trade began in November last year and closed at a record low of R7 yesterday, said their conduct did not justify "dismissal or the termination of their directorship, nor would it be in the best interests of The Prepaid Company, Blue Label and its stakeholders for their employment or directorship to be terminated".