This is novel, a PLC done for insider trading. Well sort of.
From the FSA on Tuesday.
Wolfson fined £140,000 for delaying disclosure of inside information
The Financial Services Authority (FSA) today fined Wolfson Microelectronics plc (Wolfson) £140,000 for failing to reveal price sensitive information to the market as soon as possible.
The delay led to a false market in Wolfson shares for 16 days.
On 10 March 2008, a major customer informed Wolfson that it would not be required to supply parts for future editions of two of its products (the “negative news”). Wolfson estimated that this represented a loss of $20 million or 8% of its forecast revenue for 2008. Wolfson also expected, based on other more positive information, that its 2008 forecast revenue would remain the same.
The negative news was such that it constituted inside information and should have been disclosed as soon as possible. On 12 March, Wolfson discussed the matter with its investor relations advisors who wrongly recommended that there was no need to disclose the negative news.
Consequently, Wolfson delayed making an announcement. Wolfson had not contacted its corporate brokers or legal advisors at this point. At its board meeting on 20 March, Wolfson reconsidered the earlier advice received. Following the meeting, Wolfson sought legal and corporate broking advice which recommended disclosing the negative news.
On 27 March, the company announced the negative news and its share price closed at about 18% lower than the previous day.
So, a false market exists for 16 days yet the fine is just £140,000. Not much consolation if you bought Wolfson shares between March 10 - 26.
All of which reinforces something we have been saying for a while - if you are City professional or PLC (and can afford a decent silk) you tend to get routed down the reg-lite path of civil action for market abuse; and if you are an idiot retail punter you are likely to get the criminal book thrown at you for insider dealing.
But the FSA says there were mitigating circumstances in the case.
In determining the final penalty for Wolfson’s actions, the FSA took into account a number of mitigating factors, in particular that the company had sought advice. Wolfson co-operated fully with the FSA investigation, and received a 30% discount of the £200,000 fine for early settlement.
So that’s alright then.
Related link:
Deal making returns - FT Alphaville
