Resilient three to be probed
The Financial Sector Conduct Authority (FSCA) has broadened its investigation into the Resilient group of companies, casting its net wide to include Nepi Rockcastle and Greenbay Properties for possible insider trading and market manipulation.
An FCSA update of investigations, dated July 26, reveals that JSE-listed Nepi Rockcastle and Greenbay have been included in the market regulator’s roll of ongoing investigations.
The two are new additions to the FSCA’s probe. The regulator began an investigation in March to scrutinise trades in Resilient and Fortress Income Fund shares after scathing allegations of share price manipulation by key directors and associates surfaced.
Nepi Rockcastle is being probed for possible market manipulation, while the investigation into Greenbay centres on both possible market manipulation and insider trading. The FSCA will review the share trades of Nepi Rockcastle and Greenbay for the period beginning 2017 to 2018.
Nepi Rockcastle, Greenbay and Fortress have long been considered by market watchers to be associated companies or stablemates of Resilient, given their complex web of cross-shareholdings in each other.
Resilient holds a 13% stake in Nepi Rockcastle and 21% in Greenbay. Fortress holds a 9.9% stake in Resilient and 24% in Nepi Rockcastle. Resilient recently unwound its shareholding in Fortress, disposing its 15.5% stake to existing shareholders.
Scathing reports by asset managers 36One and Mergence, stockbroker Navigare, and independent sell-side research house Arqaam Capital, have put the spotlight on questionable practices in the Resilient group of companies.
The property group has been accused of using its cross-shareholdings, black economic empowerment trust Siyakha, and questionable accounting policies to artificially boost share prices, dividend payments, and net asset values.
One’s report said Resilient’s related parties – companies associated with it and individuals close to Resilient executives – traded large volumes of Resilient, Fortress, Nepi Rockcastle and Greenbay shares with the intention of boosting share prices.
One concluded that the high valuation of shares in the four companies was because of “deliberate (and frequently concealed) actions by some of the influential owners and key management”.