Resilient issues warning over probe
Company says it will take legal action unless watchdog speeds up inquiry
The company at the centre of share manipulation allegations, which caused a sell-off that cost SA property investors almost R120bn, has warned it will take legal action if ongoing investigations into the matter are not wrapped up soon.
A combined R119bn has been wiped off the collective market capitalisations of the four listed entities associated with the Resilient group of companies year to date due to share price drops of 41%-62%.
The combined market cap of Resilient, Fortress, Greenbay and Nepi Rockcastle was R267.2bn at January 9 before the start of the sell-off.
The combined market cap has now shrunk to just short of R150bn.
The property company has responded to market concerns about how it conducted its affairs and has made changes to its structure and to how it calculated its annual dividends, CEO Des de Beer told Business Day on the sidelines of a presentation about Resilient’s financial results for the year to June.
This was while management waits for the Financial Sector Conduct Authority (FSCA) to bring closure to a protracted investigation into alleged insider trading and market manipulation around Resilient.
The FSCA’s market abuse department is investigating possible insider trading and price manipulation in the Resilient group of companies’ shares, as well as potential false and misleading reporting regarding the Resilient group.
De Beer said the authority is dragging its feet and owes the market finality. "They need to come back to us with something in the next few months. We have faced numerous allegations, which we showed had no basis," De Beer said.
"We can’t wait years for a resolution from the FSCA.
"We would have to take legal action if this went on for too long," he said.
The FSCA, which was previously called the Financial Services Board, has been formally investigating trades of Resilient’s shares since March.
The investigation has since been extended to companies associated with Resilient: Fortress, Nepi Rockcastle and Greenbay Properties.
The FCSA’s head of the directorate of market abuse, Solly Keetse, said that investigations are continuing.
"The complex investigations into Resilient are ongoing. The investigators are hard at work trying to expedite the completion of the investigations," Keetse said.
Stanlib’s head of listed property funds, Keillen Ndlovu, said while there is negative sentiment about Resilient’s stock and the market is still waiting for the outcome of the FSCA’s probe, the company still has a strong underlying portfolio and is set to outperform its peers.
"The tough economic environment is expected to continue to weigh on the underlying performance of the property portfolio for Resilient as well as for the sector as a whole but given the above-average operational performance we expect Resilient to fare better than [the] market average," he said.