BusinessCompany NewsWoolworths fined £350,000 by FSA

Woolworths fined £350,000 by FSA

The FSA has fined Woolworths for failing to disclose information to the market, that gave the retailer an unfair advantage.

High street retail chain Woolworths has been fined £350,000 by the Financial
Services Authority for failing to disclose information to the market in a timely
manner.

The company failed to discloseinside information that was likely to have a
significant effect on its share price, creating a false market position.

Margaret Cole, Director of Enforcement at the FSA, said: ‘Clean, efficient
and orderly markets depend on timely and proper disclosure of relevant
information. Woolworths’ failure to disclose vital information led to a false
market in its shares for 29 days. This sort of failure is unacceptable.’

The retailing giant’s subsidiary, EUK, signed an agreement with Tesco Stores
Limited to supply it with entertainment products in August 2004.

The two companies then changed the deal in December 2005, which gave TSL a
discount estimated at £8m for a 12 month period from 1 March 2006.

The discount represented a 10% drop in Woolworths anticipated profits for the
financial year 2006/2007, but the retailers failed to disclose the information
to the market until 18 January 2006. This left Woolworths with an unfair
advantage and in breach of Disclosure Rule 2.2.1.

‘Investors deserve, and the FSA expects, higher standards than Woolworths
showed. We will not hesitate to take action where listed companies fail to meet
obligations imposed by the Rules and Principles’ said Cole.

Further reading:

FSA
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