FCA enforcement action against CEO for disseminating misleading information

The FCA has publicly censured the former Chief Executive Officer of Worldspreads Group plc, a company which was traded on AIM, for market abuse.

Worldspreads, a financial spread betting company, was admitted to trading on AIM in August 2007. The FCA found that the admission documents contained misleading information in relation to Worldspreads’ financial position and omitted key information that investors needed to make an informed investment decision. The CEO was closely involved in the drafting and approval of the admission documents and was aware of the obligations to provide accurate information to the market.

In light of this, the FCA concluded that the CEO had engaged in market abuse contrary to section 118(7) of the Financial Services and Markets Act 2000 (FSMA) by disseminating information that gave a false and misleading impression, knowing that such information was false and misleading. (That offence is now contained in Articles 12 and 15 of the Market Abuse Regulation (MAR).)

The FCA also found that the CEO engaged in further abusive activity between January 2010 and March 2012 in relation to spread bets placed by him on Worldspreads shares. The FCA concluded that these transactions gave a false or misleading impression as to the demand for Worldspreads shares, contrary to section 118(5)(a) of FSMA, and employed manipulating devices in order to deceive the market, contrary to section 118(6) of FSMA (now Articles 12 and 15 of MAR).

The FCA would have fined the CEO £658,900 but agreed to a public censure in light of evidence that a fine would cause serious financial hardship.

Worldspreads' former Chief Financial Officer has already been fined £11,900 for market abuse (again reduced for financial hardship) and the financial controller was fined £105,000. Worldspreads went into administration in March 2012.