“If in doubt count it out!”: a review of the AIT criminal trial
| DOI | https://doi.org/10.1108/13581980710727047 |
| Published date | 27 February 2007 |
| Pages | 108-115 |
| Date | 27 February 2007 |
| Author | Samantha Hatt,Richard Burger |
| Subject Matter | Accounting & finance |
FEATURE ARTICLE
“If in doubt count it out!”: a review
of the AIT criminal trial
Samantha Hatt
Chambers of Christopher Kinch QC, London, UK, and
Richard Burger
Mills & Reeve Solicitors, Cambridge, UK
Abstract
Purpose – The purpose of this paper is to consider the outcome of the Financial Services Authority
(FSA)’s first ever contested criminal prosecution of company directors accused of making misleading
statements to the market.
Design/methodology/approach – The paper reviews the trial and the comments of the trial judge
and court of appeal on sentence and confiscation.
Findings – This case shows the FSA’s willingness to prosecute significant cases of market
misconduct and how seriously the courts consider such behaviour.
Originality/value – This paper will be of interest to the directors and officers of listed companies,
their professional advisers and regulatory lawyers.
Keywords Financial reporting,Crimes, Financial services
Paper type Case study
Introduction
In February 2004, three former directors of AIT Group plc (AIT), an AIM listed
company, appeared at the City of London Magistrates’ Court accused of making
misleading statements to the market contrary to Section 397 of the Financial Services
and Markets Act 2000 (FSMA). All three pleaded not guilty and their case was
transferred to Southwark Crown Court for trial.
This case represented a landmark criminal prosecution for the Financial Services
Authority (FSA). Not only was it the first case brought under section 397 of FSMA, but
it was also the FSA’s first contested prosecution[1].
In August 2005, after a jury trial of approximately four months, two of the directors.
Carl Rigby (Rigby) and Gareth Bailey (Bailey), were found guilty of the less serious
offence of recklessly making a misleading statement. The third director was acquitted
of all charges.
Background
In 2002, both Rigby and Bailey were directors of AIT, a software licence company
which was concerned with the development, supply and maintenance of software for
the financial services sector, and in particular call centres. Rigby was Chairman and
Chief Executive and Bailey was the Finance Director. As the company’s shares were
quoted on AIM of the London Stock Exchange, AIT had obligations to keep the market
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
JFRC
15,1
108
Journal of Financial Regulation and
Compliance
Vol. 15 No. 1, 2007
pp. 108-115
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980710727047
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