FCA fines Non-Executive Director for insider dealing and improper disclosure

The FCA has today fined Gavin Breeze £59,557 for engaging in market abuse in the form of insider dealing and has also publicly censured him for improper disclosure.

The FCA found that Mr Breeze, who holds several directorships of private companies and is also a Non-Executive Director of one AIM listed business, attempted to sell his entire 8% shareholding in MoPowered plc while in possession of inside information. Had Mr Breeze been successful, he could have avoided a loss of up to £242,000. He also passed the inside information onto another shareholder.  In addition to the fine and censure, the FCA has ordered Mr Breeze to pay restitution amounting to £1,850 plus interest of £259 to the individuals who suffered financial losses as a result of his actions. The individuals who bought Mr Breeze’s shares did so at a higher price than they would have done had the information known to Mr Breeze been public.

Mark Steward, Director of Enforcement and Market Oversight at the FCA said:

‘Mr Breeze’s misconduct demonstrates the abuse of insider trading is still not well understood or appreciated, even by experienced industry professionals.  Mr Breeze has done the right thing in acknowledging his wrong-doing and offering to compensate counterparties, who were entitled to be safe from trading with or in the same market as a prohibited insider, like Mr Breeze.

Prohibited insiders, especially market professionals, will be caught and be made to account to those they have misled. While the amounts are small, the principle here is an important one and our message to market professionals in particular cannot be any clearer.’

In September 2014, the CEO of MoPowered telephoned Mr Breeze and told him the company was intending to raise new capital via a share placement. The CEO subsequently emailed Mr Breeze asking whether he would be interested in subscribing for shares at what he was told would likely be a substantial discount to the company’s current share price. Attached to the CEO’s email to Mr Breeze was a presentation setting out the company’s plans for the funds raised through the placing which included a clear statement that the information it contained was likely to be considered inside information. The FCA considers it was clear the discounted placement, once announced, was going to have a substantial impact on the company’s share price. As it turned out, when the placement was disclosed, the share price of MoPowered fell from 20.25p to 8p in the first hour of post-announcement trading.

Mr Breeze forwarded the CEO’s email and attached presentation to another shareholder who was not an insider thereby disclosing inside information. Fortunately the other shareholder did not act on the information.

Prior to the placing, the CEO emailed Mr Breeze a second time, asking if he would provide a significant level of funding in order to prevent the share placing proceeding at a considerable discount to the share price at the time. Very shortly after receiving this email, Mr Breeze instructed his broker to sell his entire shareholding in MoPowered ‘at any price’.

The broker was able to sell 10,000 of Mr Breeze’s 1,273,500 shares before MoPowered announced the discounted share placing at 5p on Monday 22 September 2014.  As mentioned, MoPowered’s share price fell from 20.25p to 8p in the first hour of trading. In selling the 10,000 shares prior to the announcement Mr Breeze avoided a loss of £1,900 and while the FCA recognises that it is unlikely Mr Breeze would have been able to dispose of his entire shareholding at the prevailing price pre-announcement, had he been able to, he could have avoided a loss of up to £242,000.

Mr Breeze made admissions in interview and proactively cooperated with the FCA’s investigation, for which he received a discount of 15%. In agreeing to settle at the earliest opportunity, Mr Breeze received a further discount of 30%; but for this, the FCA would have imposed a penalty of £85,057.

The FCA statement and related information are available here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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