The Zimbabwean Treasury and the Reserve Bank of Zimbabwe have ordered the Zimbabwe Stock Exchange to suspend trading in Rainbow Tourism Group and Afre Corporation shares following allegations of insider trading.
Sources said Treasury and central bank officials were concerned about the possibility that the firms had engaged in transactions in violation the Securities Act.
The sources said Rainbow Tourism, which owns and operates hotels, and Afre Corporation, with insurance and property subsidiaries, are expected to remain suspended from trading until the investigation has been completed.
They said regulators were focused on a US$12 million loan to Patterson Timba, formerly executive chairman of Afre, by businessman Jayesh Shah, for which Timba, founder of troubled Renaissance Financial Holdings, pledged shares in the two companies as security. Shah later sought conversion of the debt into equity, sources said.
Neither Timba nor Shah could be reached for comment on the regulatory move.
Economist Prosper Chitambara commented that little could be said until the investigation is completed and authorities release more information.
"We have to wait and see what happens next as I believe that there are other companies engaged in these clandestine activities,” Chitambara said.