Release Date: 5th August 2022
To access the original FCA document, click here.
Summary
Sir Christopher Gent has been fined £80,000 by the FCA for unlawfully disclosing inside information in his capacity as the non-executive Chairman of ConvaTec Group Plc. The fine, pursuant to section 123 of the Financial Services and Markets Act 2000, addresses breaches of Article 14(c) of EU MAR.
Reasons for the Fine:
- Position and Responsibility: Sir Christopher Gent was appointed as non-executive Chairman of ConvaTec in October 2016, with governance responsibilities and involvement in the preparation of the company’s RNS announcements to the LSE.
- Unlawful Disclosure: On 10 October 2018, Sir Christopher disclosed inside information regarding a forthcoming RNS announcement about the revision of ConvaTec’s financial guidance and the CEO’s retirement. This disclosure was made to senior individuals at two of ConvaTec’s major shareholders, which was not within the normal scope of his duties.
- Negligence: Despite receiving training on EU MAR and possessing considerable experience, Sir Christopher negligently disclosed the information without properly considering its nature or seeking formal advice. He failed to assess what information could be disclosed and to whom, leading to unlawful disclosure.
- Lack of Formal Classification: At the time of disclosure, ConvaTec had not formally classified the information as inside information. Sir Christopher was also informed by ConvaTec’s brokers that more precise information was needed before making any announcement. Despite these factors, the FCA found his actions to be negligent.
- Confidentiality Obligations: ConvaTec had confidentiality agreements with its major shareholders, and Sir Christopher imposed confidentiality and no-dealing obligations on the individuals he disclosed the information to. However, these measures did not mitigate the breach of Article 14(c) of EU MAR.
Key Takeaways for Other Firms:
- Strict Adherence to MAR: Ensure all disclosures of inside information comply with EU MAR regulations and are made in the normal exercise of employment duties.
- Proper Classification and Timing: Formally classify information as inside information and ensure the timing and manner of disclosure are appropriate.
- Seek Formal Advice: Obtain clear and formal advice before disclosing potentially sensitive information.
- Training and Awareness: Regularly train senior executives and staff on compliance with market abuse regulations and ensure they understand the implications of unlawful disclosures.
- Robust Governance: Maintain strong governance structures to oversee the dissemination of market-sensitive information.
Conclusion:
The FCA’s fine on Sir Christopher Gent underscores the importance of adhering to market abuse regulations and the need for diligence in handling inside information. Firms and individuals must ensure that all disclosures are made within the boundaries of their professional duties, supported by proper advice and in compliance with regulatory requirements. This case highlights the serious consequences of negligent disclosures and reinforces the need for stringent internal controls and governance.
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