JSE denies claims of share price manipulation by small miner Mantengu
Is market manipulation happening on the Johannesburg Stock Exchange? Veteran stockbroker David Shapiro weighs in.
Stack of coins, trading, stock market, stocks. Image: 123rf.com
The Money Show's Stephen Grootes is joined by David Shapiro, Chief Global Equity Strategist at Sasfin Wealth.
There's a legal storm brewing after Mantengu Mining (MTU) accused the Johannesburg Stock Exchange (JSE) and others of manipulating the group's share price.
The JSE has rejected the claim, which the small miner has formalised through a criminal complaint it laid with the Hawks.
Mantengu says this is the culmination of approximately 18 months of investigative work done by the company and its various advisors.
After raising its concerns of share price manipulation with the bourse, the JSE ignored these and instead chose to investigate MTU for alleged breaches of certain listings requirements, the company says in a Sens statement.
"Evidence also suggests that the JSE covered up a naked short on the company’s shares by borrowing shares from MTU’s largest shareholder, to ensure that a trade (a short on MTU shares without any scrip lending arrangement in place) was executed, and then replaced the borrowed shares shortly thereafter. When MTU queried this with the JSE, the JSE chose to threaten MTU in its response."
Mantengu Mining
Stephen Grootes gets some insight from veteran stockbroker David Shapiro, Chief Global Equity Strategist at Sasfin Wealth.
Shapiro points out that there's been no proof of wrongdoing yet, although the claim has led to a lot of conspiracy theories.
He sketches in detail the various scenarios in which something could have gone wrong, including short selling.
"Trying to read through the information available, no one's clarified what led to that 1.8 million shares that they were looking for - was it a mistake, an incorrect trade, or was this a naked short sell (which is actually illegal)?"
David Shapiro, Chief Global Equity Strategist - Sasfin Wealth
"There will be an electronic trail, but no one's giving us the trail to make the conclusion."
David Shapiro, Chief Global Equity Strategist - Sasfin Wealth
It's surprising that the JSE itself has not openly explained what the reason for this development is, Shapiro reiterates.
To hear more from Shapiro, listen to the interview audio at the top of the article