Wolfson fined for following IR agency advice
IR services firm Makinson Cowell is struggling to maintain its reputation after its client Wolfson Microelectronics was fined by the UK’s Financial Services Authority (FSA) for failing to disclose information regarding a lost contract.
The FSA says Wolfson took the decision not to disclose the bad news after seeking advice from Makinson Cowell in March 2008. Wolfson now faces a £140,000 ($193,000) fine.
The news concerned a 2008 lost contract with Apple to provide computer chips for the new range of iPods, a deal worth an estimated $20 mn in revenue for Wolfson.
‘On March 12, Wolfson discussed the matter with its IR advisers, which wrongly recommended that there was no need to disclose the negative news,’ the FSA notes in its verdict.
Following a board meeting on March 20, Wolfson reconsidered the Makinson advice and sought legal and corporate broking advice, which recommended disclosing the negative news.
On March 27, the company announced the negative news and its share price closed nearly 20 percent lower than the previous day.
‘Companies have the primary responsibility for meeting their disclosure obligations,’ comments Sally Dewar, managing director of wholesale and institutional markets at the FSA.
‘While they may benefit from seeking advice from those in a position to comment on their regulatory requirements, they cannot rely, without due consideration, on such advice.’
Makinson Cowell has offices in both London and New York and boasts many blue-chip companies from North America and Europe among its clients.