Market abuse earns individual £15,000 fine

Robert Middlemiss was fined £15,000 for market abuse last month. In April 2002, while Company Secretary of Profile Media Group (PMG), Mr Middlemiss learnt that Profile Pursuit Inc (PPI), the firm’s US subsidiary, had experienced a major revenue shortfall which would affect its full year results to June 2002. Senior management determined that the revenue of all other PMG subsidiaries should also be reviewed and a “cover story” was used to prevent disclosure of the negative information. Mr Middlemiss was not briefed formally on the problems encountered at PPI but management at PMG Head Office let him know of the revenue decline and the requirement to reforecast turnover at the group’s other subsidiaries. On 26 April 2002 PMG’s Board met to consider the situation and the firm’s bankers were advised of the revenue slippage and the likelihood that it would breach its banking covenants. On 26 April 2002 Mr Middlemiss sold 70,000 PMG ordinary shares without prior permission from his Chief Executive Officer or Financial Director, which he had sought before trading on previous occasions. On 2 May 2002, PMG issued a trading statement that warned of full year results “materially below expectations”, the share price dropped from 14.5p to 4.75p. Mr Middlemiss had avoided a potential loss of £6,825.