The Financial Conduct Authority (FCA) has hit an AIM-listed investment company with a £70,000 fine for late disclosure of insider information, the first of its kind since the regulator was granted such powers in July 2016.
United Arab Emirates-headquartered Sharia-compliant Tejoori Ltd is the first company to fall foul of the Market Abuse Rules (MAR).
The FCA said that Tejoori had last year valued a shareholding it held in a German waste company, Bekon, at US$3.35m.
Later in the year, Bekon was acquired by kitchen furniture maker Eggersman.
As part of the deal, Tejoori was obliged to offload its shares “for no initial consideration”, said the FCA.
It failed to disclose this fact, and the fact that there was “only a possibility” it might receive money for its shareholding”.
And in any case, any funds would be “materially lower” than what Tejoori had pid for the stock.
“Without knowing these details,” said the FCA, “the market speculated, in online bulletin boards, about the amount that may have been paid to Tejoori.
“The bulletin board discussions regarded the sale as a positive development for Tejoori and Tejoori’s share price rose sharply on 22 and 23 August 2016, increasing 38% over the two days,” said the FCA
FCA executive director of enforcement and market oversight Mark Steward said: ‘This was a serious breach. Issuers must have regard to their disclosure obligations at all times and misunderstanding the commercial reality of a transaction is no excuse.’