Release Date: 14th December 2017
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has fined Tejoori Limited (Tejoori) £70,000 for failing to disclose inside information promptly, in breach of Article 17(1) of the Market Abuse Regulation (MAR). This is the first fine imposed on an AIM company for late disclosure since MAR’s introduction on 3 July 2016.
Tejoori, a self-managed closed-ended investment company, had its shares traded on AIM between March 2006 and December 2017. In early 2016, Tejoori’s key investments included a shareholding in BEKON Holding AG, valued at USD 3.35 million. On 12 July 2016, Tejoori was informed of a compulsory acquisition of its BEKON shares by Eggersmann Gruppe Gmb
The Financial Conduct Authority (FCA) has fined Tejoori Limited (Tejoori) £70,000 for failing to disclose inside information as required by Article 17(1) of the Market Abuse Regulation (MAR). This is the first such fine imposed on an AIM company since MAR’s introduction on 3 July 2016.
Tejoori, a self-managed closed-ended investment company, had its shares traded on AIM between March 2006 and December 2017. In early 2016, Tejoori’s material investments included a shareholding in BEKON Holding AG (BEKON), valued at USD 3.35 million. On 12 July 2016, Tejoori was notified of the compulsory acquisition of its BEKON shares by Eggersmann Gruppe GmbH & Co. KG (Eggersmann), requiring Tejoori to sell its BEKON shares for no initial consideration and with only a possibility of deferred consideration significantly lower than Tejoori’s valuation.
Tejoori failed to disclose this inside information promptly, breaching MAR. The shares were transferred on 10 August 2016, but the market was unaware of the sale terms. Consequently, market speculation positively impacted Tejoori’s share price, which rose by 38% on 22 and 23 August 2016. The London Stock Exchange queried the price rise on 23 August 2016, but Tejoori, misunderstanding the SPA’s legal effect, initially denied holding any inside information.
It was only after clarification from Tejoori’s legal adviser that the company released an announcement on 24 August 2016, confirming the sale of its BEKON shares for no initial consideration and uncertainty regarding future consideration. This resulted in a 13% drop in Tejoori’s share price.
Mark Steward, FCA Executive Director of Enforcement and Market Oversight, stated that Tejoori’s failure to promptly disclose inside information misled the market, preventing investors from making fully informed decisions. Tejoori co-operated fully with the FCA’s investigation and agreed to an early settlement, qualifying for a 30% discount on the fine, reducing it from £100,000 to £70,000.
Key Takeaways for Other Firms:
- Prompt Disclosure: Always disclose inside information as soon as possible.
- Accurate Communication: Ensure all communications and disclosures are clear, accurate, and not misleading.
- Understand Legal Obligations: Properly understand the legal and commercial implications of transactions and agreements.
- Investor Transparency: Maintain transparency to allow investors to make informed decisions.
In conclusion, Tejoori’s case underscores the importance of adhering to MAR’s disclosure requirements. Companies must ensure they have effective systems in place to manage and disclose inside information promptly to maintain market integrity and investor trust.
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