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Sweden’s financial regulator has closed a year-long market abuse probe into a $2.7bn share sale by top executives at private equity group EQT and will not take action against the buyout group.
The Swedish Financial Supervisory Authority investigated whether Stockholm-based EQT violated market abuse rules by failing to promptly disclose that it was considering ending a lock-up period early, a move that enabled its most senior executives to sell stock a year earlier than planned.
EQT did delay disclosing the information, the regulator found, but “the conditions were met” that permitted it to do so. It found some violations of EU market abuse rules requiring companies to draw up lists of the people who have access to insider information, but said these were minor.
“Given the nature of the violations, there is no cause for [the regulator] to take additional action based on the investigation,” it said on Friday.
The decision brings an end to a year of uncertainty for EQT, during which questions about the probe weighed on a group that has grown rapidly in recent years to become one of Europe’s biggest buyout groups.
Since the announcement of the early share sales — by top executives including chair and founder Conni Jonsson and chief executive Christian Sinding — EQT’s share price has fallen 37 per cent. EQT said at the time of the sales last September that the “partial lock-up release” would improve liquidity in the stock.
“We are pleased the inquiry has been concluded and found EQT to have acted correctly and appropriately,” Sinding said in a statement. “We took the handling of information very seriously throughout the lock-up revision process and are satisfied that this matter is now resolved.”
Under the lock-up agreement from EQT’s 2019 initial public offering, shares were not supposed to be sold until September 2022. But EQT said on September 7 last year that the lock-up would be partially ended a year early, allowing partners at the company to sell $2.7bn of stock.
EQT’s board had “granted a mandate” to its chief financial officer on August 31 last year to decide whether and when the lock-up period should be changed, the Swedish regulator found. It said a decision to end the lock-up a year early was made on September 7 and announced about an hour later.
The August 31 decision amounted to inside information, the regulator said. However, it found that EQT was permitted to refrain from disclosing it at the time.
Companies can delay making information public if “immediate disclosure would likely prejudice the legitimate interests of the issuer” and if holding the information back “would not likely mislead the public”, it said.
EQT and the regulator have had a “professional dialogue” since it opened the inquiry last September, the private equity group said.
Shares of EQT were down 0.75 per cent by Friday lunchtime.
EQT manages roughly €77bn and its main shareholder is the investment vehicle of Sweden’s Wallenberg family.
Additional reporting by Richard Milne
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