Company boss convicted of misleading LSE

The power of the London market's watchdog to tackle cases of market abuse was seen to have been sharpened today by the landmark conviction of a company boss.

Carl Rigby, former chairman and chief executive of software company AIT, was found guilty at Southwark Crown Court in London of “recklessly” making a “misleading, false or deceptive” statement to the stock exchange.

The company’s former finance director Gareth Bailey was convicted earlier in the week, while former sales director Alistair Rowley was cleared.

The case centred on a statement made by AIT, based in Henley-on-Thames, Oxfordshire, England in May 2002, when it told shareholders that it would meet profits forecasts of £6.7m (€9.9m).

Weeks later it issued a surprise profits warning, which sent the company’s share price down by 80% in a single session.

The profits forecast hinged on the inclusion of three contracts worth £4.8m (€7m) and which had not been signed up.

The jury failed to reach a verdict on whether Mr Rigby, 43, “knowingly” misled investors, while Mr Bailey, 36, was acquitted of the same count on Tuesday.

The case was the first criminal prosecution brought by the British Financial Services Authority under new powers given to the market watchdog. It had previously dealt with market abuse cases through its civil enforcement arm, where the maximum penalty is a fine.

The two men will be sentenced on October 7, with the maximum jail term being seven years.

Margaret Cole, FSA director of enforcement, said: “This case demonstrates the FSA’s willingness and capability to take all necessary action in pursuit of its objective of maintaining market confidence, including prosecuting criminal charges against individuals where appropriate.”

Legal experts said the convictions, which followed a trial lasting almost three months, showed the willingness of the FSA to commence market misconduct proceedings.

Richard Burger, senior solicitor at Mills and Reeve, said: “It also demonstrates that the FSA’s enforcement division has the resources and staff capable of successfully prosecuting a complex and lengthy criminal case.”