Baltimore sued over 'market abuse' claim

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The Independent Online

The dispute between Baltimore Technologies and its largest shareholder intensified yesterday after the Bermuda-based Acquisitor Holdings said it would sue over accusations that it had deliberately driven down the company's share price in order to buy stock cheaply.

Baltimore, the former internet star which is transforming itself into a green energy business, said that it had made a formal complaint about Acquisitor to the Financial Services Authority, citing behaviour that might amount to "market abuse" under new financial regulations.

The company said Acquisitor had made a series of inaccurate statements about Baltimore at the same time as it was buying the company's shares. Specifically, Baltimore referred to one episode on 30 March when it claimed that Acquisitor made critical comments about the company and then bought 400,000 shares, as the price was falling from 45p to 41p.

Acquisitor hit back yesterday, saying that on the day in question the shares actually rose in value. The shares fell the following day when Baltimore published its financial results and announced plans to become a renewable energy company.

"This statement is inaccurate and defamatory," a spokesman for Acquisitor said. "We will contact the FSA ourselves tomorrow and we also plan to sue the directors of Baltimore for damages. They have defamed us, it is as simple as that."

A spokesman for Baltimore said the statement had been drafted by its lawyers.

Acquisitor, the biggest shareholder in Baltimore with a stake of 15.35 per cent, has been locked in a dispute with Baltimore's chairman, Bijan Khezri, for months. It has requisitioned an extraordinary shareholders' meeting on 6 May and is seeking to remove the company's five directors, including Mr Khezri, and replace them with five candidates of its own.

Baltimore claims Acquisitor has been systematically trying to undermine it and its board by alleging a lack of financial viability and transparency. "During this period and whilst making such statements Acquisitor has been an active purchaser of shares in the market. The company is concerned that this behaviour may amount to market abuse under the Financial Services and Markets Act, 2000 as being likely to give a regular user of the market a false and/or misleading impression of the value of the company," its statement said.

Acquisitor responded: "This is a cynical and desperate move by a group of men who are frightened their sinecures are about to be removed. We would urge shareholders to focus on the main issue which is simply one of management."