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Administrative fine imposed on Imtech for market manipulation

Measure

Fine

On 02 December 2015, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of €1,250,000 on Royal Imtech N.V.

 
States of the legal proceedings
Fine imposed Objection Appeal Further appeal
Submitted Decision rendered Submitted Decisiion rendered Submitted Decision rendered
02-12-2015 2-12-2016*

* On 16 February 2016, the bankruptcy trustees of Royal Imtech N.V. have withdrawn the objection dated 12 January 2016 against the administrative fine imposed on Royal Imtech N.V., as a result of which the administrative fine has become irreversible by law.

During the period from 20 July 2012 to 21 November 2012, Imtech disseminated information that sent or could have sent an incorrect or misleading signal at five different moments divided over three periods. This means that Imtech violated the ban on market manipulation (Section 5:58, first subsection, opening lines and part d, Wft).

Bankruptcy

Imtech was declared bankrupt on 13 August 2015. The AFM imposes the fine, because the offences that were committed date from a period in which Imtech was still active. The AFM considers the fine justified also after bankruptcy. The bankruptcy does not alter the fact that the AFM takes action against such offences, whereby society's trust in a listed company such as Imtech was seriously harmed.

Spreading incorrect or misleading information allows the disseminator of that information to influence the demand for, the offer or price of financial instruments. This creates an artificial price, which does not constitute a realistic representation of the actual economic and financial circumstances of the relevant issuing institutions. This harms the confidence of investors in the sound operation of the financial markets. It is important that investors are provided with full, correct and accessible information.

Imtech issued a press release on 20 July 2012 in which it announced that a contract had been signed for the (further) realisation of the Adventure World Warsaw (AWW) amusement park. The press release includes merely a selection of the information concerning the contract, inter alia concerning the value of the contract and Imtech's role in this project. Other relevant information is lacking, however. At that time, Imtech was aware of the problems relating to the financing of an amount of €147.6 million by AWW. Publishing only part of the information concerning the contract means that Imtech disseminated information that sent or could have sent an incorrect or misleading signal.

In addition, Imtech published the interim figures for 2012 on 31 July and 07 August 2012 in which the amount of €147.6 million from AWW, which had still not yet been paid at that time, was presented as 'cash and cash equivalents' by means of a 'promissory note'. Pursuant to the applicable regulations, i.e. the International Financial Reporting Standards (IFRS), this note should not have been presented in this manner. This made the press release and the interim figures for 2012 show a picture that was more positive than was actually the case. The AFM considers that this also means that Imtech disseminated information that sends an incorrect or misleading signal.

And finally, Imtech published a Trading Update Q3 2012 on 30 October 2012 and confirmed it on 21 November 2012. On the basis of the internal third-quarter figures, in which it again incorrectly presented the promissory note as cash and cash equivalents, Imtech included in this press release that its financial position was stable and that it complied with the covenants with credit providers.

The financial situation was not stable on the basis of the correct figures, however, and Imtech failed to comply with the covenants at that time. Imtech exceeded the agreed ratio considerably. The AFM considers that Imtech also disseminated information that sends an incorrect or misleading signal on 30 October and 21 November 2012.

Amount of the fine

The AFM considers the fine of €1,250,000 appropriate in view of the offences. When determining the amount of the fine, the AFM took into account Imtech's size before bankruptcy. The AFM is of the opinion that because the fine can no longer be collected in the present situation it is no longer relevant whether Imtech is able to actually pay the amount. The AFM also took account of the fact that the publication of the press release on 20 July 2012 violated the obligation of immediate publication of price-sensitive information (Section 5:25i, second subsection, Wft) and the ban on market manipulation (Section 5:58, first subsection, opening lines and part d, Wft). A fine was imposed on Imtech for both offences. The AFM also considers it relevant that Imtech has reached settlements with the aggrieved investors.

If you have questions or complaints, you can contact the AFM's Financial Markets Information Line: 0800-5400 540 (free of charge).

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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