On August 13, 2018 the London Stock Exchange (Exchange) announced that it has concluded two separate disciplinary actions as private censures against AIM companies for breaches of the AIM Rules for Companies (AIM Rules). The Exchange has published details of these disciplinary actions, on an anonymous basis, for the purpose of educating the market on the expected standards of conduct for AIM companies under the AIM Rules.
Private censure and fine of £75,000 against an AIM company
An AIM company has been privately censured and fined £75,000 (discounted to £50,000 for early settlement) for breaches of AIM Rules 10 and 31.
The AIM company gave an update regarding the progress of its business via social media. Some of the information disclosed in this update was information which should have been notified via a Regulatory Information Service, before it was first disclosed through social media. The AIM company did not have an adequate social media policy to monitor its social media output, including controls to check that information made public through social media was not released before it was notified in accordance with the AIM Rules.
The AIM company breached AIM Rule 10, by making public relevant information via social media before it was disclosed in a regulatory notification. By failing to have sufficient procedures, resources and controls in place to monitor its disclosures made through social media, the AIM company also breached AIM Rule 31.
The Exchange notes that AIM Regulation gave guidance to nominated advisers and AIM companies regarding the interaction of social media with an AIM company’s disclosure obligations under the AIM Rules in December 2016.
While the Exchange recognises that social media can be of significant value to AIM companies when communicating with their investors, it comments that this case highlights the importance of AIM companies ensuring they have sufficient procedures, resources and controls in place to manage these communications and to ensure that no information is disclosed that should have been first notified in a regulatory notification. AIM Rule 10 is a fundamental AIM Rule which promotes equal and timely disclosure of regulatory information to the market, and is important in maintaining the integrity of the market. The Exchange points out that disclosures of regulatory information before that information is notified in a regulatory notification should not be made, in whatever form, whether for example this is via a ‘tweet’, podcast or an interview with a journalist.
It also points out that AIM companies should also have regard to the Market Abuse Regulation, as any early or selective disclosure may give rise to issues beyond the AIM Rules, including market abuse.
Private censure and fine of £75,000 against an AIM company
An AIM company has been privately censured and fined £75,000 (discounted to £50,000 for early settlement) for breaches of AIM Rules 11 and 31.
The breaches relate to the AIM company’s approach to providing information to its outgoing nominated adviser in circumstances where the relationship between the AIM company and its nominated adviser had become difficult.
In breach of AIM Rule 31, the AIM company did not keep its existing nominated adviser informed as to its progress in appointing a successor nominated adviser, notwithstanding frequent requests for updates during the notice period. The nominated adviser required this information so that it could advise the AIM company on its AIM Rules disclosure obligations. As a consequence, the AIM company delayed notifying the market when (i) the impending departure of its existing nominated adviser and its failure to appoint a replacement nominated adviser had become price sensitive, and (ii) it could no longer withhold this information under the guidance to AIM Rule 11.
Even where there is a deterioration in the relationship between an AIM company and its nominated adviser, the Exchange points out that it remains incumbent on the AIM company to meet reasonable requests for information from its nominated adviser and to seek its advice regarding compliance with the AIM Rules whenever appropriate and to take that advice into account. These three requirements are no less important during the period in which a nominated adviser is serving notice.
(LSE: AIM Disciplinary Notice – AD 19 – 13.08.18)