The FCA has fined an AIM-listed investment company £70,000 for failing to inform the market of inside information regarding the compulsory acquisition of one of its holdings.
Biogas company Eggersmann Gruppe acquired Tejoori’s entire shareholding of Bekon on 10 August 2016 and informed the market the following day.
However, that market update did not mention Tejoori, which did not make any separate announcement its shares had been bought. The FCA says Bekon was one of only two material holdings in the investment company.
Tejoori’s share price rose sharply on 22 and 23 August 2016, increasing 38 per cent over the two days, as the market speculated in online bulletin boards that the development was positive for the Shari’a-compliant investment company.
The London Stock Exchange contacted Tejoori’s nominated adviser on 23 August 2016 regarding the sudden price rise.
Due to a misunderstanding regarding the share purchase agreement it had entered into Tejoori told the nominated adviser it had not sold any shares.
It was only when Tejoori’s legal advisers confirmed the Bekon shareholding had indeed been sold that the market was updated. This resulted in the investment company’s shares falling 13 per cent on the day of the announcement on 24 August 2016.
FCA executive director of enforcement and market oversight Mark Steward says: “Tejoori’s failure to promptly disclose inside information misled the market in Tejoori’s shares and prevented investors from making fully informed investment decisions. 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, which was first listed on AIM in 2006, ceased trading on 5 December 2017.
The fine is the first imposed on an AIM-listed company since new market abuse legislation was introduced in July last year.
Tejoori notified the FCA of its breach and it co-operated fully with the investigation. It agreed to settle at an early stage and qualified for a 30 per cent discount under the FCA’s executive settlement procedures.