The City watchdog has fined Sir Ken Morrison £210,000 for failing to disclose share sales worth more than £450m in the supermarket group founded by his father.
The Financial Services Authority said Sir Ken broke stock market rules on “disclosure and transparency” when he failed to inform the company about a series of share disposals that cut his stake from 6.38% to 0.9% over a three-year period. The fine was reduced from £300,000 after he cooperated with the investigation and agreed to settle early, thus qualifying for a 30% reduction in his penalty.
The FSA said he did not benefit financially from breaking the rules but that his silence meant that the market was “misled as to the ownership of voting rights in WM Morrison”.
“Investors are entitled to know when major and influential shareholders significantly reduce their interest in a listed company,” said Tracey McDermott, the FSA’s acting director of enforcement and financial crime. “It is important that significant shareholders recognise that timely and accurate disclosure of their shareholdings and voting rights is a fundamental component of a properly informed securities market. Failure to comply with the rules risks damaging investor confidence in the financial markets.”
When he retired in 2008, he rearranged his £1bn stake – gifting millions of shares to family trusts – to save about £100m in capital gains tax when the rate went up from 10% to 18%. Following the changes, the supermarket group said his personal stake was 6.38%. There were no further announcements until March this year when, in a statement to the stock exchange, the company said it had “received notification” of substantial movements in the former chairman and chief executive’s holding and that it was now less than 1%.
The FSA said Sir Ken, who holds the honorary post of life president of Morrison’s, was bound by stock market rules to tell the company when his voting rights fell below 6%, 5%, 4% and 3% respectively. The lapse meant his shareholding was listed incorrectly in the company’s annual report.
He told the FSA he was “not aware” of his obligation to tell the company of the changes in his voting rights. In its judgment, the FSA said: “Whilst a man in Sir Ken’s position should have been aware of his obligations and might have been expected to take legal advice when selling his share, there is no evidence to suggest that he was reckless or that his conduct was deliberate.”
Sir Ken, 79, joined his father’s company aged 26 in 1952. William Morrison had started trading from a single market stall in Bradford, selling eggs and butter. Sir Ken floated the company in 1968 and maintained an unbroken record of growing sales and profits until the botched takeover of rival Safeway in 2004.