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Croatian millionaire's Afarak Group fined over insider trading

FIN-FSA has intervened in Afarak's operations in the past, and fined its principal owner.

Stelliten kaivos Etelä-Afrikassa.
The company's Stellite mine in South Africa. Image: Philip Mostert / Afarak Group

Finland's Financial Supervisory Authority (FIN-FSA) has fined the Afarak Group nearly 1.5 million euros for violations related to insider trading.

The 1.45 million euro penalty stems from the company failure to comply in late 2017 with regulations on the disclosure of inside information and drawing up of a list of designated insiders.

Just before Christmas that year, the firm's share price rose based on inside information about a planned takeover bid, FIN-FSA says.

The company should then have disclosed this information to the public or assessed whether the situation met the conditions for delayed disclosure of inside information, and should also have set up an official insider list.

In the early months of 2018, "the company failed to fulfil a number of other obligations under the Market Abuse Regulation and the Securities Market Act," the financial watchdog said in a statement on Tuesday.

The authority says that the size of the penalty is based on various factors including "the significance of said inside information to investors, the duration of the breach and to the fact that the company’s breaches are likely to have complicated the supervision practised by the FIN-FSA and increased the risk of inside information leaks. Additionally, the company has failed to cooperate with the FIN-FSA in investigating the matter," it adds.

The firm may still appeal the decision.

Former CEO fined again in June

The specialty alloys producer has operations in Germany, Malta, Turkey and South Africa.

Founded in the village of Ruukki, the Helsinki-based metals firm was known as the Ruukki Group from 1985 to 2013. At that point it changed its name after settling a dispute with Rautaruukki, another metal firm that now markets itself using the name Ruukki. It was established in the nearby town of Raahe.

Croatian businessman Danko Končar is Afarak's former CEO, current COO and principal owner via various other companies. His wife Jelena Manojlovic is on the firm's board.

FIN-FSA has intervened in Afarak's operations in the past, and fined Končar. Most recently, in June, it ordered him to pay accrued supplementary fines of 110 million euros.

At that point the authority cited "the severity of Končar's misconduct" which it said had "served to undermine confidence in the securities markets".

Also in June the Regional State Administrative Agency of Southern Finland had ordered a special audit of Afarak’s administration and accounts for various financial periods.

In 2017, Finland's National Bureau of Investigation (NBI) probed Končar's suspected links to organised crime.

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