JOHANNESBURG (miningweekly.com) – A designated adviser to listed Wescoal was on Wednesday found guilty of insider trading and made to pay an administrative penalty of R150 000.

Judge Frikkie Eloff found that Marius Meyer, the designated adviser to the JSE/AltX-listed coal junior, had contravened Section 73 of the Securities Services Act and that the two counts brought had been "adequately established".

The Financial Services Board (FSB) conducted the investigation and its Directorate of Marketing Abuse had brought the case before the FSB's enforcement committee.

Judge Eloff and a panel including HK Matolo-Dlepu, Ebi Moolla and Rob Barrow, found that Meyer of Exchange Sponsors was in possession of inside information when he bought 39 310 Wescoal shares for 87c a share and 90c a share in transactions on March 3 and 4 in 2008.

Judge Eloff said that the shares of Wescoal increased rapidly from 117c a share on April 11 to 233c a share on April 18 in the same year once the Wescoal agreement on which Meyer had inside information was finally signed and made public.

Enforcement counsel Deva Govender of the FSB said that Wescoal's negotiations for the purchase of prospecting mining rights over various farms was not in the public domain, but was known to Meyer when he bought the shares. That could not be attributed to coincidence

Nazir Cassim, senior counsel for Meyer, said that Meyer had terminated a partnership and was investing in Wescoal because it was one of the clients that he had inherited in the dissolution of the partnership. He was also investing in the shares of his other clients.

Cassim said that Meyer had been under the impression that the deal Wescoal was negotiating would not proceed and that he had ceased buying Wescoal shares when he learnt that the negotiations were to be converted into a signed contract.

Judge Eloff found that Meyer should have terminated the mandate that he had given to Rand Merchant Bank to buy Wescoal shares on February 26, 2008, which he did not do until March 4, 2008, at 12:14.

"All those should not have been made," Judge Eloff said.

He said that the inference could be drawn that Meyer had been fully aware of his obligations in his capacity as a designated adviser to Wescoal and that he was fully aware of what constituted an insider.

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