Carl Rigby and Gareth Bailey, the former executives of the software firm AIT who were jailed for market abuse last year, won their appeal to have their confiscation and compensation orders reduced yesterday, saving them more than £380,000 and £100,000 respectively.
Court of Appeal judge Lord Justice May dismissed rulings at their original confiscation hearing in November, which deemed theyshould be penalised for the paper profit they made on their AIT shares due to their crime. The pair were convicted last October for "recklessly" making misleading statements to the stock exchange in May 2002. In a market announcement, the company claimed its earnings were to be in line with expectations, when it was relying on three contracts which were not signed, and which fell through.
The initial announcement sent the shares sharply higher. But the pair did not cash in their stock until months later, after the truth had been revealed and the price had collapsed. Although Bailey had been excused paying his confiscation order, due to lack of funds, Rigby had been ordered to pay £380,000. The appeal judges scrapped this yesterday.
Lord Justice May - with his fellow judges, the Honourable Mrs Justice Rafferty and His Honour Judge Diehl - also overturned an earlier decision to make the pair pay back the wages they had earned after the announcement, up until they left the company.
"There was no causal link between the offences of which they were convicted ... and their continued employment," he said. "The salaries were thus not obtained as a result of, or in connection with, the commission of the offence."
Although his confiscation order was scrapped, Rigby must still pay £208,000 in compensation to AIT's investors, as well as a further £250,000 contribution towards the legal costs of the Financial Services Authority, which brought the case against him. Bailey's compensation bill of more than £140,000 was cut to £35,114.
Rigby was originally sentenced to three and a half years in prison, reduced on appeal to 18 months. After five months, he was released on an electronic tag, and is now on parole. Bailey's sentence was cut from 18 to 9 months. He was released on an electronic tag in January.Reuse content