DiData faces insider trading probe

South African regulators to investigate surge in trades in the days before NTT buyout announcement

Trading places: Trade activity involving DiData shot up in the days preceding the NTT deal

Regulators are to investigate possible insider trading in Dimension Data (DiData) shares, as trade volumes reached unexpected highs in the days before the firm's sale.

On 15 July Japanese telco NTT announced it had agreed a £2.1bn deal to acquire London- and Johannesburg-listed DiData. An average of 2.57 million shares in the Cisco Gold partner are traded every day.

But two days before the NTT announcement volumes were more than triple this amount. On 14 July, more than five million shares were traded.

Now the South African Financial Services Board (FSB) has revealed it has opened an insider trading case relating to the pre-deal trading activity. An investigation will begin in due course and DiData has indicated it will support the FSB. Under South African law, individuals collared for insider trading can be fined up to three times the profit or loss resulting from the trades.

In an interim management statement released on Friday, DiData revealed sales for its third fiscal quarter grew 22 per cent on the corresponding period last year. Operating profit also enjoyed "good growth" for the three months to the end of June, said the integrator.