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Ex-Vodafone boss Sir Christopher Gent fined £80,000 for leaking inside information

·3-min read
Former Vodafone Boss Christopher Gent To Take Over At GlaxoSmithKline...This image is not included in any subscription deal. Use of this image will incur a charge. LONDON, ENGLAND - MAY 27 - David Levenson/Getty
Former Vodafone Boss Christopher Gent To Take Over At GlaxoSmithKline...This image is not included in any subscription deal. Use of this image will incur a charge. LONDON, ENGLAND - MAY 27 - David Levenson/Getty

The City grandee and former chief executive of Vodafone, Sir Christopher Gent, has been fined £80,000 by the financial watchdog for unlawfully disclosing insider information.

Sir Christopher was found to have revealed financially sensitive information about Convatec before it reached the markets when he was chairman of the FTSE 250-listed medical equipment maker.

The Financial Conduct Authority (FCA) said Sir Christopher had "acted negligently" by telling two senior members of staff at two of Convatec's biggest shareholders that the company's chief executive was retiring and it planned to revise its financial guidance.

Sir Christopher, who was knighted in 2001, spent a decade as chairman of GlaxoSmithKline, where he came under pressure from investors towards the end of his tenure for the company's sluggish share price performance. He announced in March 2019 that he would leave as chairman of Convatec, with John McAdam succeeding him.

Mark Steward, the executive director of enforcement and market oversight at the FCA, said: "Private disclosure of inside information, especially by the chairman of a listed issuer, risks investor confidence and the integrity of financial markets.

"Sir Christopher failed to properly apply his mind to the question of what information he could properly disclose.

"Inside information is not a private commodity for those with privileged access to it.

"The law requires inside information to be disclosed properly and not to major shareholders or others in advance of announcements, as in this case."

The FCA found that the information was disclosed despite Convatec having a confidentiality and non-dealing obligation agreement with one of its biggest investors. The watchdog said that the City grandee should have known not to share the information given his training and experience.

Sir Christopher is one of the City’s most renowned figures having held a string of powerful positions at blue-chip corporations on either side of the Atlantic.

While chief executive of Vodafone, he secured one of the largest hostile deals in corporate history when the mobile titan mounted a $183bn (£152bn) takeover of German rival Mannesman in 2000.

The mammoth acquisition later turned sour when Vodafone was forced to issue a goodwill charge of £28bn, in one of the largest post-acquisition write-downs on record.

The FCA focused on when Sir Christopher wrongfully disclosed the information to the investor at around two working days before the information was released.

Convatec's shares dropped by more than a third on the day the information was disclosed in 2018 that chief executive Paul Moraviec was leaving and its growth forecasts would be cut.

Sir Christopher said in a statement that he was encouraged to share the information because he believed he was acting in the best interests of the company.

He added: “I am very disappointed that the FCA has found against me in circumstances where I believed I had sought advice and received encouragement to act as I did.

“The decision acknowledges the steps I took to obtain advice at the time and has not questioned my belief that I was acting in the best interests of the company.”

Mr Stewart added: "We will continue to rigorously enforce against breaches when we see them to ensure this important principle remains uppermost in the minds of issuers and their senior officers."

A spokesman from Convatec said: "The FCA has taken no action against the company. This is a personal matter for Sir Christopher Gent and it would not be appropriate for us to comment further.”