Former AIT directors ordered to compensate investors
FSA/PN/120/2005
11 November 2005
Carl Rigby, 43, the former Chairman and Chief Executive of software firm AIT, was ordered today at Southwark Crown Court to pay £208,796 in compensation to investors, £381,273 by way of confiscation of assets and £250,000 towards litigation costs incurred by the Financial Services Authority (FSA). Gareth Bailey, 36, the firm's former Financial Director, was ordered to pay £141,686 in compensation. *1
In October Mr Rigby was sentenced to 3½ years imprisonment and was disqualified from being a company director for 6 years after he was convicted of one count of recklessly making a statement, promise or forecast that was misleading, false or deceptive (See press release 106). Mr Bailey, who was convicted of the same count, was sentenced to 2 years imprisonment and was disqualified from being a company director for 4 years. *2
Following the convictions, private and institutional investors who lost money after purchasing AIT shares on the basis of misleading information were invited by the FSA to apply to the Court for compensation. Private investors applied for compensation totalling £18,716, while institutional investors (including pension funds) applied for compensation totalling £1,262,736. The court ordered that they should be paid in full, excepting the sum applied for by Aberforth.
The FSA's total costs for the investigation and litigation were £1.96 million.
The FSA would like to acknowledge the contribution of the City of London Police Financial Investigations Unit in tracing and recovering the assets of the defendants.
Notes to editors
- Applications for compensation were received from:
- Michael Jenkinson £13,590
- Neil Miller £1,191
- Peter Light £3,935
- Standard Life (on behalf of individual pension plan holders) £123,000
- Morley Fund Management £208,766
- Aberforth Partners (on behalf of corporate pension schemes) £930,968 (it was ruled that their investment decision was not based on the misleading statements).
Mr Rigby had assets worth at least £3 million. Mr Bailey had assets worth £158,000.
- This is the first criminal action taken by the FSA under s397 of the Financial Services and Markets Act 2000. This section sets out the criminal offences of making a misleading statement and engaging in a misleading course of conduct for the purpose of inducing another person to exercise or refrain from exercising rights in relation to investments.
- When the FSA decides whether to bring criminal proceedings or to refer the matter to another prosecuting authority it will apply the basic principles set out in the Code for Crown Prosecutors.
Under the Code for Crown Prosecutors, the FSA will in each case apply the Full Code Test, whether:
- there is sufficient evidence to provide a realistic prospect of conviction against the defendant on each criminal charge ('the evidential test'); and
- having regard to the seriousness of the offence and all the circumstances, criminal prosecution is in the public interest ('the public interest test').
- The court delivered its verdict in this case on 16 and 18 August 2005: (See press release 91).
Mr Rigby and Mr Bailey were sentenced on 7 October 2005: (See press release 106). - The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
*1On appeal, the confiscation orders were quashed and Mr Rigby's compensation order reduced - see statement of 12 July 2006.
*2 These sentences were reduced on appeal - see statement of 21 December 2005 for further details.