LONDON: Two former company executives were sentenced to prison terms by a judge after they were convicted in August by a jury at Southwark Crown Court for what is described as recklessly issuing a statement that was "misleading, false or deceptive in a material particular".
Judge Christopher Elwen sentenced Carl Rigby, 43, former chairman of software firm AIT Plc., to undergo 31/2 years in prison and Gareth Bailey, 36, the company's former finance director, to two years. The two are the first company executives to be convicted under domestic market abuse laws after the Financial Services Authority initiated its first criminal action under the Financial Services and Markets Act 2000. The judge said they damaged the integrity of the stock market. "If investors, large and small, come to the view that they cannot trust the information companies announce to the market, they will avoid the market when making investment decisions," he ruled.
The cases involve a statement issued by Rigby and Bailey in May 2002 via the regulatory news service saying AIT's profits would be in line with market expectations of 6.7 million pounds for the year to the end of March 2002. It was found later that the company did not conclude three contracts, proceeds (4.8 million) from which were to form part of the profit forecast. It had instead given three customers backdated agreements with secret side letters saying they were non-binding.
As the issue became public, AIT's share prices crashed and the company lost 90 per cent of its market value.
Judge Elwen told the court: that the two would have received the maximum seven-year prison terms had the jury not acquitted them on a more serious charge of deliberately misleading the market. The judge banned Rigby from taking any role as company director for six years and Bailey for four years.
AIT, once a 100 million-pound company, made call centre software and had customers like Marks & Spencer, Bradford & Bingley and NatWest.
While the lawyers for Rigby sought a suspended sentence in view of his strong character references and the harsh reputational and financial damage he had already suffered, Bailey's lawyers requested that their client be given a community service order. They also made an offer of contributing one-third of his monthly salary from his employment as means of compensation.
Judge Elwen did not budge and said, given the seriousness of the offence, only custodial sentences can possibly follow.
Posted
on : Sun, 09 Oct 2005 13:45 GMT | Business News
By : Salim Patel
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