The reprimand seems inevitable after a series of controversial trades by directors of the company and their wives. These had not been cleared timeously with the bourse, and appeared to be in breach of listing requirements. <\/p>\n
Several directors of Blue Label subsidiary The Prepaid Company and their spouses bought and sold shares worth millions of rand in the days following the publication of interim results on February 19. But they failed to disclose these transactions to the JSE within the 48 hours required, prompting the bourse to investigate. <\/p>\n
The JSE is empowered to censure and penalise the company and the errant directors, though it can be lenient if it can be shown that there was no deliberate attempt at wrongdoing. <\/p>\n
The company, in which software giant Microsoft holds a 12% stake, says the directors “lacked appreciation” of the listings requirements, but concedes that the affair has caused it harm. The share price has slipped since Business Day first broke news of the trades in March. <\/p>\n
Blue Label joint CEO Mark Levy says the failure to report the trades was a “processing error”. His brother, co-CEO Brett Levy, says the issue has been blown out of proportion. “The punishment we have received does not fit the crime,” he says. “We hit the front page of the newspaper five times.” <\/p>\n
The company says the trades could not be considered insider-trading or malicious. It says it wants to accept its censure as soon as possible so that it can get on with business. <\/p>\n
A company spokesman says a full statement will be released once the JSE releases its findings, which Blue Label does not want to pre-empt. <\/p>\n
The damage, though, may already have been done. Independent analyst Irnest Kaplan, of Kaplan Equity Analysts, says he is aware of smaller investors who have dumped all their shares in Blue Label because of what happened. “It has left a sour taste in the mouth,” he says. <\/p>\n
The incident raises an interesting question about the role of listed companies in informing directors of their responsibilities. Kaplan says Blue Label’s directors are young and may not be fully aware of their duties. <\/p>\n
He says the JSE ought to offer them training, as it does for directors of newly listed companies on AltX (Blue Label is on the main board). “I don’t think at heart they’re bad guys,” Kaplan says. “But they are young and I don’t think they know all the rules.” <\/p>\n