Nicola Mawson
Former Bytes Technology Group chief executive Neil Murphy appears to have escaped unscathed after his fall from grace, following an admission he traded shares without letting the relevant parties know.
He has only to pay back bonuses from the time of the company’s listing in London in December 2020.
Murphy left Bytes under a cloud on February 21, after failing to disclose more than a hundred share transactions he made on the London Stock Exchange (LSE) to either the dual-listed company or the market, in compliance with regulatory requirements.
In addition, it later transpired that Murphy also made 15 transactions on behalf of his wife between December 29, 2021 and November 20, 2023.
Bytes disclosed all these deals to the relevant bourses.
The disgraced former chief executive, who traded in the stock without the relevant notifications between January 6, 2021 and November 10 last year, resigned after the UK’s Financial Conduct Authority sent him a voluntary request for information on Valentine’s Day this year.
Bytes’ annual report for the 2023/24 financial year said the company was “shocked” by Murphy’s actions.
“We were particularly shocked by the actions of former CEO, Neil Murphy, who resigned in February over undisclosed share dealing, not least because this came in the wake of the discovery in July 2023 that [former] non-executive director, Alison Vincent, had not disclosed a purchase of shares by a person closely associated with her,” it said.
Murphy’s only punishment listed in the annual report is to pay back annual bonuses worth £274 825 (R6.6 million), from the time the company listed on the LSE until he left.
Ansie Ramalho, chairperson of the King Committee on Corporate Governance in South Africa, told Business Report on Friday that companies’ had limited powers to penalise rogue executives.
“There is not much more that the company itself can do against the director other than attempting to get the money back, although it could perhaps consider bringing an application to have him declared as delinquent, or for an order to place him under probation,” Ramalho said.
However, Murphy may face other consequences, as regulators in both South Africa and the UK are likely to follow with their own sanctions.
“As always, it will take time,” Ramalho said.
The company, which was spun out of Altron a few years ago and subsequently listed on the LSE, had placed Sam Mudd at the helm on an interim basis following Murphy’s departure and subsequently, on May 10, made her post permanent.
In addition, Murphy was still allowed to trade shares, as the annual report indicated he could sell ordinary shares up to a maximum value of £500 000 (R12m) until June 22 this year.
Ramalho said that what was particularly concerning in this instance, and an aspect that will be considered by regulators should they pursue their own sanctions against Murphy, was the repeated failures to disclose trades.
“Insider trading is notoriously difficult to track. It is for this reason that regulatory provisions, which require disclosure by directors and by persons discharging managerial responsibility on their share transactions, are so important,” she said.
“The transparency that these disclosure provisions aim to achieve is a critical ingredient for effective monitoring.”
Ramalho added that, under the law, only the company would have a claim against a director, not shareholders.
Bytes announced, on March 18, that it had appointed another independent committee to investigate the issue, with PwC and law firm Travers Smith advising the committee.
it said once the investigation is complete, and the committee has reported to the board, Bytes will be able to announce a date for the release of its 2024 financial year.
This was anticipated to be in late May or early June 2024.
BUSINESS REPORT