Cape Town - David Woollam, a director of consumer watchdog Summit Financial Partners, told Fin24 on Friday that his name has been cleared by the Financial Services Board (FSB) regarding allegations of insider trading brought against him by furniture retailer Lewis Stores [JSE:LEW].
Summit has taken on Lewis in the past about what it claims to be a campaign to clean up certain unsecured lending practices.
Woollam says he sees the FSB decision as "another small victory in my long battle with Lewis". According to Woollam, he has also obtained confirmation from the FSB that it is not investigating him for alleged market manipulation.
Lewis, on the other hand, said in 2015 it lodged a complaint with the FSB against Woollam "for the making and/or publishing of false, misleading or deceptive statements, promises or forecasts".
According to Lewis the FSB’s Directorate of Market Abuse has confirmed in a letter, dated September 28 2016, and addressed to Lewis’ legal representatives, that the investigation into the allegations of "false, misleading, deceptive statements, promises and/or forecasts" made against Lewis, is still ongoing.
This is despite the investigation by the FSB into possible insider trading of Lewis shares having been closed and finalised.
"No legal action was taken in this matter, due to there been insufficient evidence," the FSB states in the letter, which Fin24 has seen. In the letter the FSB says that once the investigation into the allegations of "false, misleading, deceptive statements, promises and/or forecasts" has been completed, the FSB will present its report at a meeting at a date yet to be confirmed.
"Summit Financial Partners will continue to work with our clients to help bring solutions to address employees' vulnerability and lack of financial knowledge and to better equip them to navigate through the financial jungle," said Woollam.
"We will also continue to campaign for the rights of our clients when we find industry players who blatantly disregard the law or act dishonestly in the consumer finance space through deceptive selling practices."
In Woollam's view, business in South Africa owes a duty of care and responsibility to ensure consumers are treated with respect and fairness.
"We face a pandemic of over indebtedness in SA, particularly among the lower income segments of our society and we implore all role players - corporates, government, labour and civil society to come together to help find sustainable solutions to this growing problem," said Woollam.
In June this year Lewis Group launched proceedings in the Western Cape Division of the High Court in Cape Town to set aside a demand received from Woollam (who owns a number of ordinary shares in the company) to declare some of the company’s directors delinquent. Woollam made this demand in terms of Section 165 of the Companies Act.
Lewis alleges that Woollam’s demand is "frivolous, vexatious and without merit". The group is seeking costs from Woollam on an attorney-client scale. The company claims in court papers that Woollam's "campaign" against Lewis is to drive down the price of Lewis’s shares "to opportunistically benefit financially by taking short positions in Lewis’s shares".
Woollam denied these allegations.
It was at the same time that Lewis also filed a complaint in respect of Woollam’s alleged short position with the FSB.
Woollam's demand relates - among others - to Lewis charging customers a cost of loss of employment insurance, which the company claimed was mistakenly sold to them.
In October last year Lewis agreed to refund a total of R67.1m to customers for the cost of loss of employment insurance - R44.1m plus R23m in interest.
In March this year Lewis completed the acquisition of a portfolio of 57 Ellerines and Beares stores in Namibia (21 stores), Botswana (20), Lesotho (10) and Swaziland (6). This expanded its store presence outside SA to 120 and follows approvals for the R250m acquisition announced in November 2015.