Aspen wants trades audited
Drug maker hopes to meet FSB over share price slide
Africa’s biggest generic drug manufacturer, Aspen Pharmacare, hoped to meet the Financial Services Board (FSB) later this week to discuss its call for an investigation into unusual trading activity in its shares last Tuesday, according to CEO Stephen Saad.
Aspen’s share price slumped 10% on January 9, before recovering, after rumours that it was the new target of Viceroy Research, which in December published a highly critical report on furniture retailer Steinhoff International suggesting that it had used off-balance-sheet vehicles to hide liabilities and inflate earnings.
Viceroy said on Twitter it would release another report on a South African company in the new year, prompting speculation that it had Aspen in its sights. The property sector also fell victim to the Viceroy rumour mill last week, with shares falling sharply in several property companies.
“We want the FSB to investigate who scored from these wild gyrations in [Aspen’s] share price and if it is illegal,” Saad said in a telephone interview. The FSB “must show some teeth”.
The slump in Aspen’s share price must have profited some investors with short positions.
FSB spokeswoman Tembisa Marele said the JSE was reviewing trading activity in Aspen and would refer any concerns to the regulator. “The specific mandate of the FSB in this area, according to the Financial Markets Act, is to investigate cases of insider trading, price manipulation and false reporting. This engagement with the JSE will determine what case, if any, the FSB ought to look into,” she said.
JSE market regulation director Shaun Davies said: “The mere existence of rumours which some investors decide to act on does not in itself point to any misconduct. There would only be cause for concern if a person knowingly spread false information about a listed security which affected the value of that security.”
He said the JSE was reviewing the trading activity in Aspen and several property companies because of material price movements that appeared to be unrelated to any information disseminated by the companies.
Aspen said on Monday that its infant milk formula brand Alula had been registered by China’s Food and Drug Administration, paving the way for it to be sold in the world’s biggest infant milk market. The administration introduced new safety rules for infant milk in 2016.
Vestact portfolio manager Byron Lotter said growth in the Chinese infant milk market had been boosted by the end of the country’s one-child policy. Aspen’s speed in getting regulatory approval for Alula would help establish the brand with consumers, who were typically very brand loyal, he said.