August 9, 2022

Former chairman of UK listed issuer fined for disclosing inside information

On August 5, 2022, the Financial Conduct Authority announced a £80,000 fine imposed on Sir Christopher Gent, a former non-executive chairman of ConvaTec Group Plc.  According to the
Final Notice issued by the FCA, Gent was appointed in October 2016 as chairman of ConvaTec, a medical device manufacturer based in Reading, United Kingdom.  As non-executive chairman, Gent’s responsibilities included the preparation of and governance over ConvaTec’s Regulatory News Service announcements.

Two years after Gent’s appointment, in October 2018, issues arose within the company that precipitated both the unscheduled retirement of ConvaTec’s then-chief operating officer, and an early RNS announcement about changes in the financial guidance for the company.  As detailed in the FCA notice, Gent disclosed these facts to a senior executive at one of ConvaTec’s largest shareholders, and to a senior individual at a company known to be interested in increasing its shareholdings in ConvaTec.

The FCA agreed that Gent had not traded on the inside information, and had not derived any direct or indirect financial benefit from making the disclosures.  However, it deemed Gent’s communication of the information to constitute the unlawful disclosure of inside information within the meaning of Article 10 of the EU Market Abuse Regulation, in breach of Article 14(c) of that regulation, as the disclosures were made otherwise than in the normal exercise of Gent’s duties, were not reasonable, and were not necessary in order for him to perform his proper functions.  The FCA found that the market abuse was committed by Gent negligently, and contrary to the relevant training he had received in EU Market Abuse Regulation compliance.

Having weighed the relevant factors, the FCA concluded that the seriousness of Gent’s market abuse was Level 3 as defined in Chapter 6 of the Decision Procedure and Penalties Manual of the Handbook of the Rules and Guidance of the FCA, that disgorgement was not appropriate, and that neither mitigating nor aggravating factors should be applied to increase or decrease the amount of the fine.  The amount of the fine was therefore £80,000, representing 20% of Gent’s income for the relevant period.

FCA press release | Final Notice