Wolfson fined for Apple news delay

Published on Tuesday 20 January 2009 20:56

WOLFSON Microelectronics has been fined for taking more than a fortnight to tell the market it had missed out on a lucrative deal with iPod maker Apple.

After a six-month investigation, the Financial Services Authority (FSA) said yesterday that Edinburgh-based Wolfson had failed to reveal price-sensitive information, creating a false market in its shares for 16 days.

The fine was set at 200,000 but reduced to 140,000 after the company reached an early settlement deal with the FSA.

Wolfson said yesterday it believed the fall in sales when it lost out on the business from Apple would be offset by growth elsewhere. It also said it had received advice that there was no need to issue a statement to the London Stock Exchange.

But Sally Dewar of the FSA said the company was ultimately responsible for disclosing information.

"It is unacceptable for a company not to disclose negative news because it believes other matters are likely to offset it," Dewar said.

"Doing this hampers an investor's ability to make informed investment decisions and risks distorting the market value of a company's shares."

The case related to Wolfson being told on 10 March last year by a major customer – known to Apple although the Edinburgh-based firm has never confirmed that it was the US giant – that it would not supply parts for two of its new products.

While this would have knocked $20 million or 8 per cent from Wolfson's 2008 revenue, the firm claimed that the customer said growth of other products that it would continue to supply – meaning the iPhone – would offset the fall.

According to the company, chief executive Dave Shrigley called investor relations advisers, which said that it did not need to issue a statement.

On 20 March, Wolfson's board discussed the matter, taking advice from lawyers and other advisers, which unanimously concluded a statement was required. When the news was announced on 27 March, Wolfson shares fell 18 per cent.

Wolfson denied the issue was linked to the hasty departure of Shrigley, who last September said he was standing down for "personal family reasons".

Chairman Michael Ruettgers said Wolfson had never intended to mislead the market and had acted in good faith.

"On receiving the information about the loss of business, the company immediately sought advice and acted upon it. Upon discovering that the initial advice was incorrect, the company took prompt action and made the announcement."