Module 16 2022

02/09/2022

Consequences of a Failure to Report Heavy financial penalties (the company, officers or connected persons)

Authorities may de-list or suspend trading

Offences like insider dealing and market abuses carry heavy criminal penalties

● Penalties for insider dealing: – UK: unlimited fines and/or up to 7 years imprisonment – US: fines of up to $5 million and/or up to 20 years – US civil penalties include up to 3 times trading gains or losses avoided

Could lead to shareholder litigation – damages are substantial

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Delays in Disclosure

Delay in disclosing information can ● mislead investors ● expose company to share holder and product liability claims FSA guidance

● “If a company is faced with an unexpected and significant event, a short delay may be acceptable if it is necessary to clarify the situation. In such situations a holding announcement should be used where there is a danger of inside information leaking before the facts and their impact can be confirmed.” In some circumstances, companies can delay disclosure at their own risk where it would not be misleading the public

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