AIT trio face 'market abuse' charges

THREE former directors of quoted software group AIT went on trial today, accused of misleading the financial markets. The allegation against the trio centres on a statement that Carl Rigby, Alistair Rowley and Gareth Bailey are said to have issued via the City's Regulatory News Service (RNS) about AIT Group's turnover and profits.

The case, brought by the Financial Services Authority, will see claims made at London's Southwark Crown Court that the three men knew it was 'misleading, false or deceptive'.

The announcement, in May 2002, on RNS said the software and services company's £6.7m profits forecast was likely to be in line with market expectations. Just a few weeks later, however, the Henley-on-Thames-based company issued a shock profits warning which sent its shares plummeting by some 80%, wiping £80m off the group's market value.

Rigby, the group's former chief executive and chairman; ex-sales director Rowley and Bailey, AITs one-time finance director, all deny four charges, including two of conspiracy.

Brought under section 397 of the Financial Services & Markets Act 2000, the charges allege that the defendants knowingly made a wrong 'statement, promise or forecast' to the Stock Exchange on 2 May, 2002. The allegations say it was issued 'for the purpose of inducing, or being reckless as to whether it may induce, another person or persons to buy or refrain from selling securities'.

The proceedings are the first criminal case against directors accused of market abuse. The FSA has the option under the Financial Services and Markets Act of 2000 to prosecute market abuse as a civil or criminal offence. It successfully prosecuted the company secretary of Alternative Investment Market (Aim)-listed Profile Media Group, Robert Middlemiss, in the civil courts for selling 70,000 shares when he knew PMG's revenues were significantly below expectations.

The shares sale enabled him to avoid a loss of £6,825. He was fined £15,000 and subsequently resigned as PMG's company secretary.

The FSA is believed to have a backlog of other cases of alleged market abuse to bring before the criminal and civil courts.