The SWX Disciplinary Commission held in its ruling that SAirGroup had violated the ad hoc publicity obligations prescribed by the Listing Rules. On 22 August 2000, SAirGroup announced in a press communiqué (as well as at a media conference) that it would record a consolidated group profit in 2000 - even if that figure would not match the results reported for the previous year. The next statement by the company was made only on 23 January 2001, when it announced a change in business strategy without a profit warning. SAirGroup's 2000 financial results were ultimately made public on 2 April 2001.
The ruling of the Disciplinary Commission held that issuers must inform the public of price-sensitive facts as soon as they become aware of those facts. By their very nature, significant changes in earnings are deemed to be price-sensitive facts. With its 22 August 2000 forecast, SAirGroup itself raised expectations in the market. On 22 November 2000, the board of directors of SAirGroup expressed serious concern about the continued deterioration of the company's business situation. This assessment, which raised serious doubts about the attaining of the results forecast on 22 August 2000, was not made public immediately. The public should have been informed at the latest at that moment. By having neglected to do so, SAirGroup violated its obligation to disclose price sensitive information.
The Disciplinary Commission deemed this violation of disclosure obligations to be severe, but nevertheless waived the quantification of a fine as imposed in conformity with the Listing Rules, given SAirGroup's bankruptcy proceedings and the apparent inability to collect any such penalty. In the same ruling, the Disciplinary Commission determined that SAirGroup also violated its disclosure obligations when, on 7 March 2001, the resignation of Moritz Suter was made public during trading hours. Unforeseen changes in the top management of a listed company are deemed to be price-sensitive facts that must be disclosed outside of trading hours. Should a disclosure during trading hours be necessary, the issuer must provide the SWX with at least 90 minutes' prior notice of the impending announcement. SAirGroup neglected to do so. In view of the fact that the market was rife with rumours for weeks, the Disciplinary Commission considered this omission as not being a severe violation.
Explanations for the media
(Lack of profit warning)
On 22 August 2000, SAirGroup announced in a press communiqué (as well as at a media conference) that it would record a consolidated group profit in the year 2000 - even if that figure would not match the results reported for the previous year. The next public statement by SAirGroup was made on 23 January 2001, when it announced a change in business strategy. The company's final results for its 2000 financial year, however, were only reported on the occasion of its 2 April 2001 financial press conference, at which time SAirGroup disclosed a loss of CHF 2.885 billion.
With its 22 August 2000 earnings forecast, SAirGroup itself raised expectations in the public. A mere three months later, on the occasion of a board meeting on 22 November 2000, the board of directors of SAirGroup expressed its serious concern about the continued deterioration of the company's financial situation. However, that board-internal determination, which raised serious doubts about the company's ability to achieve the result expectations it had raised itself, was not made public at the time. By failing to inform the public immediately, SAirGroup violated the provisions governing ad hoc publicity.
Pursuant to Art. 72 para. 1 of the SWX Listing Rules (LR), the issuer must inform the market of any price-sensitive facts which may have arisen in its sphere of activity and are not of public knowledge. Price sensitive facts are new facts which, because of their considerable effect on the issuer's assets and liabilities, financial position or on the general course of business, are likely to result in substantial movements in the price of the securities. A profit warning - i.e. an indication that earnings will not meet analysts' consensus estimates - is deemed to constitute, insofar as the issuer itself raised expectations in the public, a potentially price-sensitive fact , thus requiring disclosure, within the context of Art. 72 LR.
Art. 72 para. 2 LR obligates the issuer to inform the public without delay as soon as it has knowledge of the main points of the price-sensitive facts in question. A postponement of such disclosure may only occur exceptionally, if complete secrecy can be guaranteed, if the new facts are based on a plan or decision of the issuer and the dissemination of such information is liable to prejudice the legitimate interests of the issuer. These requirements must be fulfilled cumulatively, which was not the case with SAirGroup.
(Disclosure of changes in the senior company management during trading hours)
Shortly before 3:30 pm on 7 March 2001, SAirGroup announced in a press communiqué that Moritz Suter had resigned with immediate effect his position as head of the carrier SAirLines as well as all of the group's affiliated air transport companies. Within a few minutes following this announcement, the price of SAirGroup shares fell by 2.2% despite otherwise stable stock market prices.
Unforeseen changes in the board of directors or top management of a listed company are also deemed to be potentially price-sensitive facts within the context of Art. 72 LR. Such facts must be made public without delay, however if possible outside of trading hours - specifically, between 5:30 pm and 7:30 am. In exceptional cases, when an announcement of a price sensitive fact cannot be avoided during trading hours, the issuer must provide SWX with at least 90 minutes' prior notice of the impending announcement. As a result of SAirGroup's failure to comply with this rule by having announced the resignation of Moritz Suter during trading hours, the equal treatment of all market participants was not ensured. That fact also constituted a violation of Art. 72 LR.
(Ruling)
On 6 July 2001, the SWX Admission Board lodged a petition with the Disciplinary Commission calling for the imposition of a fine against SAirGroup as well as a publication of the imposed sanction. The Disciplinary Commission concurred in principle with the petition but, given the SAirGroup's bankruptcy proceedings and the evident incollectibility, waived the quantification of the fine imposed in conformity with the LR, and instead satisfied itself with the mere determination that SAirGroup had violated the disclosure obligations as laid down in Art. 72 of the Listing Rules.
The announcement made during trading hours on 7 March 2001 announcing the resignation of Moritz Suter constituted a further violation of the Listing Rules. This violation, in itself, and in view of the rumours that had already been rife in the market for weeks, was considered by the Disciplinary Commission as not constituting a severe violation and would have been sanctioned with a reprimand in itself.
SAirGroup subsequently appealed this Disciplinary Commission ruling. To that purpose, SAirGroup initiated, on 24 January 2002, arbitration proceedings as provided for in the rules and regulations of the SWX. However, before the Arbitral Tribunal was able to reach a verdict in this regard, SAirGroup withdrew its appeal on 30 January 2003. As a consequence, the Disciplinary Commission ruling of 21 December 2001 acquired immediate legal force.
