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Cement manufacturer, East African Portland Cement Company has blamed the Wednesday crash in its share price at Nairobi Stock Exchange to insider trading and called for review of trading rules.
The company's shares declined by 42 per cent from Sh108 on Tuesday closing price to a low of Sh40 closing the day at an average of Sh62.
The dramatic decline occurred after the cement manufacturer released its financial results for the year ending June 2008 that showed a dip of 36 per cent in pre-tax profits. On Thursday, the share gained to close at Sh68.
Reveal details
Briefing the media at Red Court hotel, Nairobi the managing director Eng John Nyambok said investigations had started but declined to reveal further details.
"Insider trading is a criminal offence punishable by law and we are narrowing down on the culprits who are behind what was witnessed in the stock exchange on Tuesday with the view to restoring confidence and discouraging such practices in future," Eng Nyambok said.
He said the Capital Markets Authority had taken up the matter and the culprits will soon be exposed.
The move comes just weeks after a similar occurrence hit Crown Berger on August 29 after it released its half year financial results.
Make findings public
The paint manufacturer share price dropped to Sh8 from opening price of Sh38. CMA is yet to make public its final finding on what triggered Crown Berger's share price fall.
Eng. Nyambok proposed for the amendment of the waiver of the 10 per cent cap on share price movement on release of material information by a company in single day trade. The usual rule restricts share price movement to a 10 per cent gain or fall in single day trading.
Other companies that have in the past complained of price fiddling through insider trading are Crown Berger and CFC Stanbic Bank. NSE has stated that it will discuss the rule with a view to amending it in its next directors' meeting.
"We are finding that rule extraneous," NSE chairman, Mr James Wangunyu told the Nation in an interview a week ago.
"We have been toying with various ideas on how to amend the rule so that it serves the interest of the market in a better way
