C21 MEDIA is reporting that U.K. children's branding firm Entertainment Rights has been fined a 245,000 GBP by the Financial Services Authority for failing to disclose an anticipated $14 million reduction to its profit to the stock exchange.
The company owns rights to properties like VEGGIETALES, WHERE'S WALDO?, CASPER THE FRIENDLY GHOST, THE LONE RANGER, HE-MAN AND THE MASTERS OF THE UNIVERSE and RUDOLPH THE RED-NOSED REINDEER, among others.
They were reportedly informed on July 10, 2008 of a change in a DVD distribution deal with Gold Key Home in the U.S. that would cause a $13.9 million dip in revenue. But the company sat on the information for two months, hoping to make up the losses elsewhere, disclosing the information on September 26, when stock then fell 55 percent.
"For markets to be clean, orderly and efficient, investors require all the necessary facts to make informed decisions," said Sally Dewar, Financial Services Authority (FSA) spokeswoman. "Listed companies must carefully assess what could be inside information and whether they need to disclose it. Putting off disclosure in the hope that future events may mitigate the impact is unacceptable."
Entertainment Rights accepted the ruling and settled early, which meant the fine will be 245,000 GBP instead of the 350,000 GBP it would have been fined had it not.
"The company accepts the judgment and has decided not to appeal the decision through the Financial Services and Markets Tribunal," ER said in a statement. The company has since made upper management changes since the case came to light and said it would take the fine as an exceptional charge in its current fiscal year.
