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The Disciplinary Committee of Nasdaq Stockholm (“the Exchange”) has found that Eniro AB (”Eniro”) has contravened the regulations of Nasdaq Stockholm (”the Rulebook”) partly in terms of the company’s financial reporting and capacity for disclosing information, and partly in terms of the company’s information disclosure in conjunction with adjustment of a forecast. Accordingly, Eniro will be subjected to a fine corresponding to three times its annual fee (total fine amounts to SEK 597 000).
The Disciplinary Committee has also found that Eniro acted in breach of the regulations contained in rules 2.4.3, 3.2.1 and 3.1.1 - 3.1.3 of the Rulebook.
Errors in accounting
It is indisputable that errors have occurred in Eniro’s accounting. Due to these accounting errors, the information disclosed and the financial statements were incorrect and, accordingly, Eniro has acted in breach of Rule 3.2.1 of the Rulebook.
The Disciplinary Committee concludes that the breaches connected with the accounting errors that have occurred and the consequent misrepresentation in the accounts have placed the Company in an awkward situation, and that the error pertained to an issue with the periodization applied and a relatively limited amount.
Capacity for market disclosures
Under the Rulebook, listed companies must maintain the requisite procedures and systems for information disclosure, including systems and procedures for financial reporting. These aim to ensure that listed companies are able to meet their obligations to provide the market with correct, relevant and clear information.
Due to these errors in Eniro’s accounting, which have indisputably occurred, the information disclosed and the financial statements were incorrect.
The Disciplinary Committee notes that, for a relatively substantial part of the actual period, the CEO also discharged the duties of the CFO. This was clearly aimed at facilitating the misrepresentation in the accounts, which is assumed to have occurred.
Furthermore, the Disciplinary Committee also notes that Eniro actually, to all intents and purposes, found itself in a situation which meant that the Company lacked adequate capacity for information disclosure and financial reporting, something that, given the conditions that existed, in the assessment of the Committee, entailed violation of Rule 2.4.3 of the Rulebook.
Forecast adjustment
Listed companies are obligated to disclose information of a price-sensitive nature as soon as possible. Information published must be correct, relevant and clear, and sufficiently comprehensive to enable assessment of the effect of the information disclosed on the company, its financial results and financial position, or the price of its listed securities.
Based on the, for Eniro, significantly unfavorable outcome in the first quarter of 2015, it was noted that it was exceedingly optimistic of the quarterly report – published April 24 and, accordingly, more than three weeks after the close of the first quarter – to retain the earlier forecast unreservedly. Given the conditions that existed at the time of the quarterly report, the failure to rectify this forecast can be described as a clear misjudgment.
The Disciplinary Committee is of the opinion that the Company deviated from rules 3.1.1 -3.1.3 of the Rulebook.
The Disciplinary Committee has no reason to doubt that the Board of Directors of Eniro devoted considerable time and sincerity to discussion of the issue of the forecast, and the Committee would like to underline that in this case, it has not ruled the Company to have consciously submitted an incorrect forecast. Nor is the Disciplinary Committee questioning the information that a rapid and unexpectedly negative trend occurred in the period immediately following the quarterly report.
In summary, the Disciplinary Committee has determined to issue Eniro with a fine corresponding to three times its annual fee. This concludes in full Nasdaq Stockholm’s investigation of Eniro.
Participating in the Committee’s ruling were former Supreme Court Justice Johan Munck, Supreme Court Justice Marianne Lundius, Company Director Anders Oscarsson, former Stock Exchange Governor Carl Johan Högbom and Ragnar Boman (MBA).
