Former AIT directors sentenced for criminal market abuse

The former directors of AIT were sentenced to imprisonment today for criminal market abuse.

Carl Rigby, 43, the former chairman and chief executive of the software firm, was sentenced at Southwark Crown Court to three years imprisonment and was disqualified from being a company director for six years.

Gareth Bailey, 36, the firm’s former financial director, received a sentence of two years imprisonment and was disqualified from being a company director for four years.

Both individuals were found guilty in August of one count of recklessly making a statement, promise or forecast which was misleading, false or deceptive.

This is the first criminal action taken by the FSA under section 397 of the Financial Services and Markets Act 2000. This section sets out the criminal offences of making a misleading statement and engaging in a misleading course of conduct for the purpose of inducing another person to exercise or refrain from exercising rights in relation to investments.

In passing sentence Judge Elwen, said: “Every member of the public, having savings by direct investment on the stock market or by and through products themselves tied to stock markets, is injured if the integrity of the market is damaged by misleading information of this kind being announced to the market.

“If investors, large and small, come to the view that they cannot trust the information companies announce to the market, they will avoid the market when making investment decisions. The health of the financial services industry which is a major contributor to the UK economy will suffer.”

Margaret Cole, director of enforcement at the FSA, says: “This was not a victimless crime. The efficient operation of the markets depends on investors’ ability to rely on information released by companies.

“Directors can expect to be held personally responsible for the announcements they make to the market, as these convictions have shown.

“The sentences further demonstrate that the courts take a serious view of this type of behaviour. Before issuing a statement, directors must carefully consider their obligations and inform and consult their advisors early in the process.”

There will be an asset confiscation hearing on November 11 2005.