FCA Enforcement Action – Non-executive Chair Fined For Disclosing Inside Information – Shareholders

The Financial Conduct Authority (FCA) has fined Sir Christopher Gent, the former
non-executive Chair of ConvaTec Group Plc, £80,000 for
unlawfully disclosing inside information in breach of Article 14(c)
of the (then) EU Market Abuse Regulation.

The fine follows a warning notice issued to Sir Christopher in
September 2021 by the FCA proposing to take action against him
– neither his name, nor the company name, was published at
that time. A warning notice is not a final decision of the FCA
– an individual has a right to make representations before
the FCA decides to issue a decision notice.

The FCA found that:

• acting in his capacity as a member of the board, Sir
  Christopher disclosed inside information to individuals in senior
  positions at two of ConvaTec’s major shareholders before this
  information had been announced to the market. The disclosures
  concerned: (i) an expected announcement by ConvaTec relating to a
  revision of its financial guidance; and (ii) the CEO’s plans
  for retirement.




• given his training and experience, Sir Christopher should have
  realised that the information he disclosed was, or may have been,
  inside information and that it was not within the normal exercise
  of his employment to disclose it.




• the disclosures cannot properly be regarded as part of
  permitted discussions of a general nature regarding the
  company’s business and market developments between its
  management and its shareholders.




• Sir Christopher acted negligently in disclosing the
  information, notwithstanding that:
  

  • ConvaTec had not formally classified either piece of
    information as inside information at the time he disclosed it;

  
  

  • ConvaTec’s brokers had advised that the financial guidance
    information was not sufficiently precise at that time to require a
    market announcement; and

  
  

  • one of its brokers knew of his plans to call the shareholders
    and convey the information.




• there is no evidence that Sir Christopher traded on the
  information or that he intended to make personal gain, or avoid
  loss, from making the disclosures.

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