No evidence of financial misconduct by Nepi Rockcastle

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Nepi Rockcastle's CEO Alex Morar said the company welcomed the decision. Nepi Rockcastle's CEO Alex Morar said the company welcomed the decision.

South Africa’s Financial Services Conduct Authority (FSCA) has closed its investigation into Nepi Rockcastle’s case, relating to possible false and misleading reporting.

Nepi Rockcastle, the second largest listed property company on the JSE, has cleared another hurdle in its bid to put the Resilient group scandal behind it after SA's highest financial market regulator cleared it of false and misleading reporting.

The owner of €5.9bn worth of shopping centres in nine east European countries said on Monday the Financial Sector Conduct Authority had found no evidence of false or misleading financial reporting by the group in 2017.

Nepi Rockcastle was part of the Resilient group of companies along with Resilient, Fortress and Lighthouse Capital, which together lost more than R100bn  last year in the biggest scandal to hit the listed property sector.

At the beginning of 2018, the companies suffered a sudden sell-off in their shares followed by the release of numerous reports by hedge fund and asset managers which made allegations  directors and management at the companies had used interrelated party deals and share price manipulation to enhance profits.

Following the sell-off, the listed property index delivered a negative total return of 25.26% in 2018, its worst performance in more than 20 years.

The FSCA has been investigating the four companies as well as the asset managers who lodged allegations against them.
In March, the FSCA cleared the directors and staff at all for companies of insider trading.

Alex Pascoe, the leader of the directorate of the market abuse investigation team at the FSCA, said his team had now finished the second part of the investigation with respect to Nepi Rockcastle only.

"We are satisfied based on evidence currently available, that there is no substance in the allegations made that Nepi Rockcastle plc intentionally or negligently made or published false statements in respect of the past or future performance, being the 31 December 2017 financial statements," he said.

The FSCA found no evidence that Nepi Rockcastle contravened section 81 of the Financial Markets Act, No 19 of 2012. 

Nepi Rockcastle's CEO Alex Morar said the company welcomed the decision.

The authority has however not yet cleared Resilient, Fortress or  Lighthouse Capital of false or misleading reporting.

The third part of the investigation which considers the JSE trades of all four companies' shares is also ongoing.

Head of listed property funds at Stanlib, Keillen Ndlovu said the FSCA's latest announcement was good news and would help bring more certainty to the sector.

Read more on:

Listed Property / REITs  |  Fortress REIT Limited  |  Resilient REIT  |  Keillen Ndlovu  |  Alex Morar  |  Nepi Rockcastle  |  Lighthouse Capital  |  Financial Sector Conduct Authority (FSCA)