FSA hits Sir Ken Morrison with £210,000 fine

SIR Ken Morrison has been fined £210,000 by the Financial Services Authority after failing to disclose that he had reduced his shareholding in the Yorkshire supermarket group.

The supermarket entrepreneur retired as chairman of Bradford-based Morrisons in 2008, at which point the company announced he had a notifiable holding of voting rights of 6.38%, valued at the time at more than £450m.

However, following the announcement in March 2008 there were no further shareholding notifications made concerning Sir Ken’s holdings until March 1 this year, despite the fact that he had reduced his holdings during that period to 0.9%.

The FSA found that Sir Ken, who is now life president of Morrisons, had breached the Disclosure and Transparency Rules by failing to disclose his reduced shareholding and voting rights in Wm Morrison Supermarkets plc.

Sir Ken failed to notify Morrisons on four separate occasions when his voting rights fell below 6%, 5%, 4% and 3% which he should have done, the FSA found.

The FSA found that while Sir Ken did not financially benefit from these breaches, his failure to notify Morrisons of the changes to his shareholding resulted in the supermarket group not being in a position to update the market in accordance with the DTR rules.

This resulted in the market being misled as to the ownership of voting rights in Morrisons and Sir Ken’s shareholding being stated incorrectly in the company’s annual report of January 31, 2010.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, said: “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. 

“Investors are entitled to know when major and influential shareholders significantly reduce their interest in a listed company. Sir Ken should have been aware of his obligations and his failure to meet them has resulted in this fine.

“The rules are designed to enhance transparency and provide investors with timely information regarding voting rights in issuers. Failure to comply with the rules risks damaging investor confidence in the financial markets.”

Sir Ken co-operated with the FSA and agreed to settle at an early stage and therefore qualified for a 30% reduction in his penalty, which would have been £300,000.