Record fine imposed by LSE on AIM company (November 2009)

23/11/2009

The London Stock Exchange recently imposed hefty sanctions - a public censure and record £600,000 fine - on Regal Petroleum plc ("Regal"), an AIM listed company, for acting in serious breach of the AIM Rules.

Regal's business focused on the exploration, development and production of oil and gas assets in various countries. It was admitted to AIM in September 2002. During a two year period (June 2003 to May 2005) it was held to have breached the AIM Rules in relation to its notifications regarding its oil exploration wells. Pursuant to the AIM Disciplinary and Procedures Handbook, the LSE referred the matter to the AIM Disciplinary Committee (the "ADC") for investigation. The ADC found that Regal had contravened AIM Rule 9 (current Rule 10) on 11 separate occasions, by failing to take reasonable care to ensure that the information it notified was not misleading, false or deceptive and to ensure it did not omit anything likely to affect the import of such information. Furthermore, Regal twice acted in breach of AIM Rule 10 (current Rule 11) by failing to release price sensitive information without delay.

In deciding the sanction, the ADC considered various factors including the number of breaches committed within the 2 year period, the seriousness of the breaches, the market impact of the breaches (significant, as demonstrated by the movements in Regal's share price during the relevant period) and the adverse publicity and damage caused to AIM due to Regal's size and high profile. At the same time, the ADC did recognise that Regal had no previous disciplinary findings against it and acknowledged that Regal had since implemented significant changes to its senior management (including its board of directors) and to its reporting systems.

The case illustrates the lengths the LSE will go it in clamping down on any public company that demonstrates such disregard for the AIM Rules.

Contact: maustin@city-law.net

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