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One of the bigger stories from earlier this week involved the controversy surrounding Capitec, Viceroy Research fixing their cross hairs squarely on a company they labelled “a wolf in sheep’s clothing“.

Capitec soon hit back, calling Viceroy’s findings “baseless” and “filled with factual errors”, and CEO Gerrie Fourie has a few other concerns, too.

The Financial Services Board,  an independent body that supervises and regulates the financial services industry in the public interest, will now investigate the possibility of suspected insider trading, due to Capitec’s shares dropping in price before the report was made public.

HuffPost reports:

[CEO] Fourie said it was “concerning” that stocks began to dive before Viceroy’s report was published.

“What is concerning is that when the report came out, our stocks dropped slightly before it was published. This shows that certain people may have known about it before. We cannot investigate this ourselves, so the FSB is now involved,” Fourie said.

On Monday, Capitec closed nearly 8 percent weaker on the markets, implying that some predicted the effect the report would have and when it would be released.

As for their battle with Viceroy, the gloves are coming off:

“We have instructed our attorneys to approach the FSB to investigate Viceroy. We are going through their report, to understand their numbers and see what is accurate and what is not. We will then consider how to handle it further. We don’t know if this report was deliberate or not, but by the end of the week, we should have a report on the matter,” Fourie said.

“The report is very one-sided, and a lot of things are incorrect.”

Every detail pertaining to Viceroy Research will now be pored over, and there may be some serious skeletons hidden in that closet.

Business Day below:

Capitec’s share price fell 12.6% on Wednesday to close at R800.60, as confusion reigned among market participants after a blistering report issued on Tuesday by short sellers Viceroy Research.

Meanwhile, questions have been raised over as to whether Viceroy Research has ties with overseas hedge funds.

The stock’s fall belied the views of fund managers and analysts who have distanced themselves from Viceroy’s findings. Denker Capital’s Kokkie Kooyman said Capitec was “still not African Bank”.

Given what’s at stake for Capitec, you bet they will leave no stone unturned.

[sources:huffpost&busday]