FSA wins first contested criminal trial

Gareth Bailey, the former finance director of AIM-listed software company AIT
Group, has been sentenced to two years in jail as the FSA won its first
contested criminal trial.

Bailey, and former AIT CEO and chairman Carl Rigby, who was sentenced to 3
years and six months in prison, were found guilty of misleading investors,
The Financial Times reports.

Judge Christopher Elwen said the offences were so serious that only jail
sentences would be appropriate.

Jurors found Bailey and Rigby guilty of recklessly making misleading
statements to the market in an announcement made in May 2002, when AIT stated
that profit targets would meet expectations even though the revenues were based
on contracts that had yet to be secured.

The jury did not, however, reach a verdict on the more serious charge over
whether Rigby had ‘knowingly’ mislead investors and acquitted Bailey on this

The case was the first the FSA had brought before a jury. Previously the
watchdog dealt with market abuse cases through its civil enforcement arm, where
penalties are limited to fines but the burden of proof is lower.

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