The Financial Services Authority (FSA) today fined Henry Cameron £350,000 for making misleading announcements to the market regarding payments from Sibir, a large energy company that was quoted on AIM, to its major shareholder Chalva Tchigirinski.
As Sibir’s chief executive officer, Cameron was directly responsible for this market abuse.
In two separate market announcements made by Sibir in December 2008 and February 2009, incorrect figures were given for the payments Sibir had made to Tchigirinski. Both of these stated that Sibir had paid a total of $115.4 million when in fact the true amount was more than $300 million. The announcements also stated that the payments were advances for real estate that Sibir was to purchase from Tchigirinski, but in fact they were not supported by a written agreement and amounted to unsecured loans.
The primary motive behind Cameron’s conduct was to retain Tchigirinski’s supportive shareholding in Sibir to prevent Tchigirinski, one of Sibir’s major shareholders, having to sell off shares as a result of his financial difficulties.
Cameron’s actions created a false market in that they gave a misleading impression as to the nature and value of Sibir’s assets and the risks the company faced. When the true position became clear, Sibir’s shares were suspended from trading on AIM and its quotation was subsequently cancelled.
Margaret Cole, director of enforcement and financial crime at the FSA, said:
"As the most senior executive director at Sibir, Cameron should have known these announcements were misleading and the serious impact they were likely to have on the market.
"The consequences of his market abuse were so serious that it led to the suspension of trading in Sibir’s shares on AIM. Our fine reflects the gravity of his irresponsible actions and shows that we are serious about taking action against directors of publicly traded companies who commit market abuse. It is not acceptable for directors to take action which is in the interests of some shareholders while keeping others in the dark."
Alexander Justham, director of markets at the FSA, said:
"The FSA is determined to ensure clean, efficient and orderly markets. Companies that are publicly traded need to ensure a rigorous approach to accuracy when disclosing information to the market and it is the directors of such companies who are critical in making sure such disclosure is correct and not misleading. This is essential to allow shareholders and investors the opportunity to make informed and accurate investment decisions as well as helping to maintain confidence in our markets."
Cameron was suspended from Sibir in February 2009 and dismissed in April 2009.
Cameron qualified for a Stage 1 (30%) discount under the FSA’s settlement discount scheme. The financial penalty of £350,000 reflects this discount. Without the discount, the financial penalty would otherwise have been £500,000.
No enforcement action was taken against Sibir.
Background
- The Final Notice for Henry Cameron [PDF] can be found on the FSA website.
- Sibir was, at the relevant time, an energy company with oil exploration and production operations in Western Siberia and refining and marketing interest in the Moscow region. For most of 2006, 2007 and 2008 Sibir was the largest company on AIM with a market capitalisation, at its peak, of over £3.416 million.
- In May 2009, Sibir was bought by a Russian energy company at a price which meant that shareholders at the date of suspension did not suffer a financial loss. In August 2009, Sibir was cancelled from AIM as the shares had been suspended from trading for six months.
- The FSA regulates the financial services industry and has five objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
