Entertainment Rights plc fined £245,000 for 78 days delay in disclosing inside information
FSA/PN/015/2009
23 January 2009
The Financial Services Authority (FSA) has today fined Entertainment Rights plc (Entertainment Rights) £245,000 for failing to disclose inside information to the market in a timely manner.
Entertainment Rights controls and owns distribution and exploitation rights to a range of children’s and family programmes.
On 29 December 2006, Entertainment Rights and its subsidiary, Gold Key Home, entered into an agreement to distribute DVDs in the United States. A variation to the agreement came into effect on 10 July 2008 reducing the company’s estimated profits for 2008 by US$13.9 million. Entertainment Rights considered that there would be future opportunities to reduce the impact of the variation and as such delayed making an announcement. The variation was inside information and should have been disclosed to the market as soon as possible.
On 26 September, Entertainment Rights made an announcement to the market about the variation and its shares fell 55% on that day. The lack of timely disclosure led to a false market in Entertainment Rights’ shares for about 78 days.
Sally Dewar, managing director of wholesale and institutional markets at the FSA, said:
"For markets to be clean, orderly and efficient, investors require all the necessary facts to make informed decisions. Listed companies must carefully assess what could be inside information and whether they need to disclose it. Putting off disclosure in the hope that future events may mitigate the impact is unacceptable. We will remain vigilant on this issue."
In deciding the penalty for this case, the FSA took into account that Entertainment Rights had taken steps to strengthen its board, had admitted the breaches to the FSA and co-operated fully with the investigation.
Entertainment Rights qualified for a 30% discount under the FSA early settlement discount scheme, otherwise the fine would have been £350,000.
Notes to editors
- The Final Notice for Entertainment Rights plc includes the background to the case, details of the principle and rule breaches, and factors taken into account when setting the level of the fine.
- In the last four years, the FSA has taken action against Wolfson; Woolworths Group plc; Eurodis Electron plc; MyTravel Group plc; Pace Micro Technology plc; Universal Salvage plc and Martin Christopher Hynes; and Sportsworld Media Group plc and Geoffrey Brown for similar listing rules breaches.
- In his speech on 20 November 2008, Mike Knight, manager of company monitoring at the FSA set out the FSA’s role in the continuing obligation regime. The speech is available on the FSA website.
- Disclosure Rule 2.2.1 states that an issuer must notify a RIS [Regulatory Information Service] of any inside information which directly concerns the issuer, unless disclosure rule 2.5.1 applies, as soon as possible. Listing Principle 4 states that a listed company must communicate information to holders and potential holders of its listed equity securities in such a way as to avoid the creation or continuation of a false market in such listed equity securities.
- 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; securing 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.
