Highlights
QUESTION 1
Read the case study/ scenario below and answer all the questions.
Fortress cleared of manipulation in PwC report
The group says PwC found no evidence confirming market manipulation and insider trading but said there was evidence of inadequate governance in the past. Fortress real estate investment trust (REIT) says an investigation into share trading activities and certain historic property transactions by the company and its directors has found no evidence of insider trading or market manipulation. And it's also been cleared by PwC of malfeasance in relation to historic property transaction. However, the probe did find evidence of inadequate governance, potential conflicts of interest and poor document management in some of these deals. And it said they may have breached legislative and regulatory
requirements.
The investigation was undertaken by a special subcommittee set up by the real estate investment trust. The subcommittee appointed auditors PwC to review share trading
activities, as well as certain historic property transactions undertaken by Fortress and its directors.
The probe was requested by several institutional shareholders last year after the claims were made against Fortress and other companies related to Resilient REIT. A report by fund manager 36One early said the groups traded at a premium to their net asset value due to "deliberate and frequently concealed actions by some of the influential owners and key management of the group". It was among a number of negative reports that resulted in a sharp decline in the value of the REITs. Fortress said its advisors were dealing with the possible breaches were being dealt with the relevant authorities, although they occurred 10 or more years ago.
Source: Adapted from: https://www.inceconnect.co.za/article/fortress-cleared-of-manipulationin-pwc-report
Required
Assuming you were part of the PwC investigation team, elaborate upon the legal principles you would have taken into account to distinguish between the following concepts:
• market abuse
• marketing manipulation
• insider trading
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