The Sanction Commission of SIX Swiss Exchange Ltd. has imposed a CHF 100,000 fine on Lonza Group AG for violation of rules governing management transactions, ad hoc publicity and regular reporting obligations.
Lonza Group AG (Lonza) failed to correctly report transactions made by a member of its senior management in February 2009, and subsequently rectified the matter too late. Furthermore, the company committed multiple violations of the ad hoc publicity rules. Firstly it failed to announce the departure of a board member as soon as the board was made aware of that fact. Secondly it did not announce the nomination of a new member of the board once the nomination had been determined. Instead, the public announcement of the nomination was made too late in conjunction with the invitation to the company’s annual general meeting of shareholders. In addition, the invitation was only received by a portion of the circle of recipients prescribed under the ad hoc publicity rules. Lonza also violated a regular reporting obligation by failing to send that invitation to SIX Exchange Regulation.
In connection with management transactions, Lonza in February 2009 reported a transaction by a member of senior management involving an amount slightly in excess of CHF 70,000 and a further transaction by the same person for an amount just under CHF 100,000. Each transaction was reported to SIX Swiss Exchange as a non-publishable omnibus report, even though collectively the two transactions caused the affected member of senior management to exceed the threshold amount of CHF 100,000, hence the reports should have been published within two trading days’ time. Lonza corrected this error only in early March 2009.
If the total value of all transactions conducted by a liable person exceeds CHF 100,000 in a given calendar month, all of those transactions must be reported to SIX Swiss Exchange within two trading days’ time for the purpose of publication on the SIX Swiss Exchange website.
Furthermore, the company violated the rules governing ad hoc publicity on a number of occasions. In keeping with past practice, the Sanction Commission determined that changes in the composition of the board of directors are in all cases to be published as stipulated under the ad hoc publicity rules. Already in an earlier decision, the Sanction Commission ruled that the issuer must publish each personnel change in the board of directors or senior management of the company within the framework of an ad hoc notice. In January 2009, Lonza’s board of directors became aware of the departure of one of it members. Lonza did not announce this departure until April 2009. However, as determined by the Sanction Commission, the company was obligated to publish that fact immediately in January 2009.
In addition, Lonza did not publicly announce the nomination of a successor to the board of directors immediately after that new member had been determined. Lonza announced the nomination only five days later in conjunction with its invitation to the AGM. Moreover, Lonza issued the invitation only to a certain portion of the stipulated circle of recipients for ad hoc notices, even though the nomination was being announced for the first time. In the case at hand, the Sanction Commission has decided that the failure to immediately publish the nomination once it had been made constitutes a violation of the ad hoc publicity rules. The same applies to the fact that the publication of the nomination was made selectively to only a portion of the circle of recipients prescribed under the ad hoc publicity rules.
Apart from the aforementioned violations of the rules governing management transactions and ad hoc publicity, the Sanction Commission has also determined that Lonza violated one of its regular reporting obligations by, in contravention of Circular No. 1, failing to provide SIX Swiss Exchange (SIX Exchange Regulation) with a copy of the invitation to the company’s annual general meeting of shareholders.
In considering this sanction, the Sanction Commission has taken into account the gravity of the breach, the degree of fault, the issuer’s sensitivity to a penalty and the fact that several sanctions have already been pronounced against Lonza during the past three years.
Information on management transactions can be found at:
http://www.six-exchange-regulation.com/obligations/management_transactions_en.html
Information on ad hoc publicity can be found at:
http://www.six-exchange-regulation.com/obligations/publicity_en.html
Information on regular reporting obligations can be found at:
http://www.six-exchange-regulation.com/obligations/reporting_en.html
This sanction decision, as well as previous sanctions in the
area of management transactions, ad hoc publicity and regular reporting
obligations, can be found at:
http://www.six-exchange-regulation.com/enforcement/sanction_decisions_en.html
