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JJB Sports fined for disclosure failures

The Financial Services Authority has fined JJB Sports Plc nearly half a million pounds for failing to disclose information to the market about the true cost of two acquisitions.

The £455,000 fine was levied after the disclosure failures led to a distorted share price and because announcements made by the firm did not correct it.

FSA director of markets Alexander Justham says: “Timely and accurate disclosure of inside information is a fundamental component of properly functioning securities market and is a key focus of the FSA in enforcing the disclosure regime around listed companies.”

In December 2007 JJB acquired Original Shoe Company for £5m in cash but failed to disclose that in addition to the price it also had to pay for the in-store stock which cost £10.038m.

In May 2008 JJB announced it had bought Qubefootwear Ltd for £1 but failed to disclose that as part of the deal it had agreed to settle the retail chain’s £6.47m overdraft.

The FSA says that in both cases the cost of the acquisition was inside information and should have been disclosed to the market as soon as possible.

Justham says: “JJB’s failure to disclose information about the two acquisitions denied investors the ability to fully understand its financial position and make informed investment decisions. The repeated failure to disclose this information showed a lack of regard for the market, the disclosure rules and investors.”

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