Former AIT directors charged with market abuse
12 February 2004 | 4304 views | 0
The Financial Services Authority has charged three former directors of banking software firm AIT with market abuse in the first criminal prosecution of its kind in the UK.
AIT's former chief executive and chairman, Carl Rigby, ex-sales director Alistair Rowley and former finance director Gareth Bailey appeared before City of London magistrates this week and were charged with two counts of making misleading, false or deceptive statements. If found guilty they each face up to seven years in prison.
The allegations centre around an interim statement to the Stock Exchange in May 2002, in which AIT reported a satisfactory end to the financial year in line with market expectations. Two weeks later, the company had four fifths of its stock market value erased after warning investors that it was running out of cash and would not meet projected revenue targets. Within a month the shares had halved in value again as a preliminary audit uncovered further shortfalls in revenue and accounting irregularities.
AIT was ultimately rescued by founder Richard Hicks under a refinancing package that diluted the value of shares held by existing investors.
The FSA said it was the first prosecution it had brought using its criminal powers under Section 397 of the act for an offence relating to market abuse.
The former AIT directors have yet to enter a plea. They were remanded on unconditional bail to appear before Southwark crown court for a preliminary hearing on 2 March.