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

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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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