It is often considered that the sorts of disclosures that a company must make to regulatory authorities or in its annual accounts are not matters that need to be given close attention.
However, where the failure to disclose such information is significant, the regulatory authorities may take action and impose regulatory penalties.
Recently, sports goods retailer JJB Sports plc was fined more than £450,000 by the Financial Services Authority (FSA) after information it released to the market concerning the acquisition cost of two subsidiaries was found to be misleading enough to create a false market for JJB shares for more than nine months.
In the case in point, the total cost of the acquisitions was understated by several million pounds. The fine took account of the fact that JJB had cooperated fully with the FSA and that nearly all the board members of the retailer had changed since the regulatory failure.
Deficient Disclosure Costs Company
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