THE Securities Commission of Zimbabwe says it will probe all trades carried out on the Zimbabwe Stock Exchange at suspiciously huge premiums or discounts as part of efforts to curtail unfair and unethical business practices. Secz chief executive Mr Tafadzwa Chinamo made the remark while addressing a Confederation of Zimbabwe Industries business ethics symposium in Harare yesterday.
The symposium was held under the theme "Sound Business Ethics an Imperative for Zimbabwe's Economic Growth".
Mr Chinamo said Secz would also investigate any hints of insider trading and take appropriate punitive action, including prosecution, where evidence of such practice is found.
Mr Chinamo said that the strategy was meant to build confidence on the country's single most active capital market.
"We will continue to question trades done at large premiums and very large discounts. Whenever such things happen we are going to be off our seats and we are going to find out what exactly will be going on" he said.
Often, said Mr Chinamo, trades executed at huge premiums or discounts pointed to unfair or unethical behaviour. The Secz boss said that they would rather have a small stock exchange than has a huge stock market used to clean ill gotten money. The local bourse, with 76 active counters, breached the US$4 billion threshold last month.
The commission recently amended the Securities and Exchanges Act to tighten and improve regulation of capital markets as well as make punitive measures more deterrent.
Against this background, Secz would provide intensive training to executives of publicly listed companies on the handling of price sensitive information to deter insider trading.
"Through training we will ensure that management of price sensitive information is done better because price sensitive information is what leads to insider trading," Mr Chinamo said.
He said directors and employees of public listed companies have most of the information of what will be happening and how they handle it may lead to insider trading.
Secz contends that the need for sound ethical and business practice is much greater nowadays because capital is a timid creature with more options today than yesterday.
This comes amid growing calls for more ethical business practice in Zimbabwe following the collapse of and crisis at strategic and public listed firms in Zimbabwe and abroad due to unethical, corrupt and unfair business practices.
Already, Zimbabwe is close to completing the drafting of its first ever code of conduct for businesses through a process spearheaded by the Zimbabwe Leadership Forum.
Speaking at the same occasion CZI chairman for the ethics committee Mrs Eve Gadzikwa said that ethical business conduct was critical to attract foreign direct investment considering 80 percent of trades on ZSE is foreign.
Mrs Gadzikwa, who heads the Standards Association of Zimbabwe and is the ZSE chairperson, said it was critical to examine the role ethics play in the growth and development of the economy.
"Confidence must be restored to the business environment at all levels, we are saying across the board, we need to continue creating confidence in our local business environment if we are to sustain our economic growth and ensure the trajectory continues," she said.
She said that with globalisation and advancement in technology there was compelling need for ethical business conduct, which if not followed may affect companies that do not adhere to ethical and fair trade.
Mrs Gadzikwa pointed out that despite the availability of guiding tools and knowledge of what needs to be done, Zimbabwe was failing to follow ethical business practice to improve its attractiveness as a prime destination for FDI.