Financial Crime World

Title: FIN-FSA Imposes €1.5 Million Fine on Afarak Group for Insider Trading Violations

Afarak Faces Major Penalty for Failure to Disclose Inside Information

The Financial Supervisory Authority (FIN-FSA) of Finland has penalized the Afarak Group with a €1.45 million fine for insider trading violations. The FIN-FSA’s statement, released on [Tuesday], outlined the reasons behind the penalty.

Insider Trading Allegations

The Afarak Group failed to disclose inside information regarding a planned takeover bid in late 2017 and failed to set up an official insider list, according to the FIN-FSA. The statement mentioned that the significant increase in Afarak’s share price before Christmas in that year, which was based on inside information, was neither disclosed publicly nor assessed for delayed disclosure.

Criticisms and Penalty Determinants

The FIN-FSA heavily criticized Afarak for the non-compliance with several other obligations under the Market Abuse Regulation and the Securities Market Act in early 2018. The penalty was determined based on several factors, such as:

  • The significance of the inside information to investors
  • The duration of the breach
  • The potential complexities it introduced to the FIN-FSA’s supervision, thereby increasing the risk of inside information leaks

The company is also reportedly under scrutiny for its lack of cooperation with the FIN-FSA’s investigation into the matter.

Previous Sanctions and Ongoing Investigations

Afarak, a specialty alloys producer that operates in Germany, Malta, Turkey, and South Africa, had previously faced sanctions. In June, the firm’s former CEO and principal owner, Danko Končar, was ordered to pay €110 million in accrued supplementary fines for misconduct deemed to have harmed confidence in the securities markets. The company originated in Finland, in the town of Raahe, and was previously known as the Ruukki Group from 1985 to 2013.

Additionally, the Regional State Administrative Agency of Southern Finland had ordered a special audit of Afarak’s administration and accounts for various financial periods in June. In 2017, the National Bureau of Investigation of Finland had also investigated Končar’s suspected links to organized crime.

Unclear Future Comment from Afarak

At the time of writing, Afarak has not yet commented on the fine, and the matter may still be open for appeal.