FSA wields its powers to fine Sportsworld executive

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The Independent Online

The City regulator yesterday slapped a £45,000 fine on the former chief executive of Sportsworld Media, a collapsed TV production company, for failing to alert the stock market to its deterioration.

Geoff Brown, the Australian who headed the company, has 14 days to pay the fine - the first ever penalty handed down by the Financial Services Authority for a breach of the City's Listing Rules.

Mr Brown amassed more than £8m from selling his stake in Sportsworld and, in the company's last full year, 2001, was paid a total of £350,000.

The FSA said Sportsworld, which part-owned the rights to the Popstars TV series, failed to tell the market its profits would not meet expectations until 28 January 2002, despite being aware of difficulties on 24 December.

Analysts thought the company was on track to make £16m in the 12 months to June 2002. Problems which became apparent internally just before Christmas prompted the company to eventually reduce that expectation to between £9m and £10m at the end of January.

The FSA's two-year investigation into Sportsworld comes after warnings had already been raised internally by a senior director about the company's forecasting methods.

Michael Gower, the chief executive of the group's Australian and Pacific business, warned Mr Brown and the company's finance director, Andy Fletcher, as early as October 2001 that the company needed to "take a reality check". Sportsworld collapsed in April 2002 after it failed to find a buyer.

The regulator also censured the company itself for the delay and said it would have been subjected to a "substantial financial penalty" if it had had sufficient resources to pay it.

Andrew Procter, the FSA's director of enforcement, said: "Mr Brown and Sportsworld's failure to inform investors and other market participants of changes in its performance ... without delay, and not a month later, could have caused investors to make decisions based on inaccurate information."

The fine against Mr Brown marks the fact that the FSA is putting more of its powers into use. The regulator has already fined a string of individuals over issues such as market abuse. But so far, the people in question are those who have been authorised by the FSA to do their jobs - such as working in financial services companies.

Mr Brown's case is the first time the FSA has fined an individual not authorised by it but subject to its regulations through the Listing Rules.

Mr Procter added: "The obligation on listed companies, and their directors, to inform the market without delay of any changes to their business performance is a fundamental protection for shareholders and is vital to ensuring the smooth operation of efficient markets."