The Abu Dhabi Securities Exchange has launched an investigation into what it describes as unusual shareprice movements of Aldar Properties and Sorouh Real Estate before they announced a $15 billion merger yesterday.
The share prices of both companies, Abu Dhabi's biggest developers, rose exactly the same amount yesterday to close up 7.9 per cent at Dh1.24. After the market closed the companies released a joint statement to announce they are considering a merger.
Both stocks moved up in lockstep again today.
Aldar, the developer behind Yas Island and Ferrari World rose 9.8 per cent to Dh1.34 this morning. Sorouh, the developer behind the Sun & Sky Towers also rose 9.8 per cent to Dh1.34.
"We were very suspicious when we saw the unusual trading movements of both stocks. We started back-office investigations yesterday morning since the share price movements became identical," said Abdullah Salem Al Naimi, the manager of market surveillance market operations at ADX.
The stockmarket last night reminded listed companies, brokers and shareholders that anyone with privileged information about a public company or its material affairs - known as insiders - are banned from trading for a specific period before regulatory filings are made.
What is more, the Securites and Commodities Authority (SCA), the UAE market regulator, prohibits insider trading from a set date before the release of financial results every quarter.
The purdah period this quarter begins on March 17 and lasts until results are published.
Elsewhere in the markets, the Abu Dhabi Securities Exchange General Index rose 0.8 per cent at 2607.81 points.
The Dubai Financial Market General Index rocketed 4.7 per cent to 1686.66 points.
Elsewhere in the region, Kuwait's measure was little changed at 6151.60 points. Bahrain's index lost 0.9 per cent 1150.06. Oman's MSM 30 Index added 0.1 per cent to 5892.18 points. Qatar's QE Index added 0.5 per cent to 8636.82 points. The Saudi Tadawul All-Share Index was up 0.7 per cent to 7533.74 points.