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FCA fines AIM invest firm £70k in first use of new powers

FCA fines AIM invest firm £70k in first use of new powers

The Financial Conduct Authority (FCA) has flexed powers granted to it by last year’s Markets Abuse Regulation (MAR) for the first time, issuing a £70,000 fine to an investment company for late disclosure.

Tejoori was listed on AIM from 2006 until its formal wind-up last week and at the time of the failure held just two investments. One of these, German biogas business Bekon AG, was held at a reported value of $3.5 million (£2.6 million) when it was purchased last year.

The managers of Tejoori failed to disclose that they had handed over the stake for ‘no initial consideration’ and only the future prospect of payment ‘materially below’ its earlier book value to a third party.

‘Without knowing these details, the market speculated, in online bulletin boards, about the amount that may have been paid to Tejoori,’ said the FCA

‘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.’   

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.’

Tejoori notified the FCA of the failure after the London Stock Exchange intervened to query its sudden share price rise. The company was found to be in breach of MAR by not releasing an annoucement about its holding in shareholding in Bekon as soon as possible.

However it went on to cooperatedfully with investigators and was therefore granted a discount to the maximum financial penalty of £100,000.  

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