Metropolitan Director in Shares Controversy

November 16 - Metropolitan Holdings, the giant insurer, has defended the head of its retail unit, Phillip Matalaka, who sold shares in the company one day ahead of a trade update for the company.

Matlaka reportedly sold 170,000 shares, valued at R13.30 each, earning  R2.26 million from the sale.

South African corporate legislation states that directors are not allowed to trade shares in what is considered "closed periods". Metropolitan said in a statement that the day before a trade update is not a "closed period".

"Phillip wasn't trading during a closed period as we're not releasing financial results," said the General Manager of Finance for Metropolitan Holdings, Tyrrel Murray. "The information being made available is not deemed price sensitive. It is freely accessible to someone like Phillip at all times."

"If these were to be treated as closed periods, folks in positions like this would never be able to trade," said Murray.

While analysts agree that Matalaka did not break any law by selling shares a day before the update, there timing was still problematic.

"The share prices did not change materially after the announcement," said an analyst. "Although it doesn't look good, there is no case for insider trading."

In another statement, separate to the Matalaka incident, Metropolitan Holdings, which focuses its business on the low and middle class income groups of South Africa, said that investment values had declined in the first nine months of the year.

In addition, new retail business sales had also declined, due to the impact of the recession and volatile stock markets around the world.