Johannesburg - Times Media Group (TMG) is the subject of two parallel investigations by the financial regulators for allegedly breaking the rules that prohibit directors and officers of a JSE-listed company from trading in the entity’s shares during the company’s closed period.
The directorate of market abuse at the Financial Services Board (FSB) and the investigations unit at the JSE are probing how Caxton & CTP Publishers and Printers liquidated its stake in TMG by selling its remaining shares to private equity firm Blackstar Group, the second-biggest shareholder in TMG, during its closed period.
A closed period is defined in the JSE’s listing requirements as the time before a financial report is released to the public. This can be a year-end, interim or quarterly report.
The closed period is one month before the release of the report and during that time insiders, including all directors of the company, directors of major subsidiaries and company secretaries, are not allowed to trade in shares.
TMG’s interim results for the six months to December last year were released on March 19, which means its closed period began on February 19. The Caxton transaction was announced on March 3.
Blackstar, founded by TMG chief executive Andrew Bonamour, bought the shares off market. This increased Blackstar’s stake to 32.3 percent, a few percentage points short of 35 percent, which could trigger a mandatory offer to the remaining shareholders.
TMG, which publishes the Sunday Times, is a competitor to Independent Newspapers, which publishes such titles as the Cape Times, The Mercury, The Star and Business Report.
News of the share liquidation came after Business Report reported that Caxton’s chief executive, Terry Moolman, had lost confidence in the strategic direction of TMG, according to a source familiar with developments inside the newspaper group.
At first Solly Keetse, the head of department of the directorate of market abuse at the FSB, said transactions during a closed period were a JSE listings issue and should be referred to the bourse’s issuer services department.
Eure Saaiman, the head of the investigations unit at the JSE, said it was aware of the alleged breach of the rules by TMG and was investigating.
“We are aware of this matter and are investigating accordingly,” he said.
When pressed further, Keetse admitted on Friday that the FSB had lodged an investigation into share transactions in TMG.
He could not provide details as he was precluded from doing so by the secrecy provisions of Financial Markets Act.
When contacted on Friday, Bonamour first said the JSE merely wanted a clarification on the share transaction and that the matter was closed.
He also said the FSB was looking into “trades” at TMG.
Pressed further, Bonamour said he had not heard formally from the JSE on anything but that the bourse had called the sponsor of TMG, PSG Capital, and asked a few questions, “which we clarified”. He advised speaking to PSG, which said it could not discuss its clients’ dealings with the press.
A source familiar with the probe said there had been an attempt by TMG to scuttle the investigation but authorities were pressing ahead with it.
When TMG reported results for the six months to December last year on March 19, the company made no mention of the investigation.
Listed companies are required to disclose investigations or any development that could have a material impact on their share price.
This requirement is meant to guard against price sensitive information falling into the wrong hands, and being used in insider share dealings.
TMG shares closed 2.33 percent lower at R21 on Friday. - Business Report