Original URL: http://www.theregister.co.uk/2009/01/09/fsa_ross_loans/
CPW co-founder's secret loans get all-clear
FSA tightens rules on stock securities
Posted in Financial News, 9th January 2009 16:50 GMT
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The co-founder of Carphone Warehouse who secretly used his stake in the firm to secure loans has been cleared of law breaking by financial investigators.
The Financial Services Authority (FSA) said today its rules on whether David Ross was required to declare the loan arrangements had been unclear. It added that in future directors must obtain permission from them to use company stock as security.
Clearing Ross and other corporate bigwigs who have done similar loan deals in the past, an FSA statement (http://www.fsa.gov.uk/pages/Doing/UKLA/company/disclosure/index.shtml) said: "Given the circumstances, we are not intending to take enforcement action in respect of prior failures to notify the market of grants of security."
Ross quit the Carphone Warehouse (http://www.theregister.co.uk/2008/12/08/cpw_cofounder_quits/) board in December when it emerged he had secured personal loans against 136.4 million of his 160 million shares without informing the board. He was also forced to quit a plum job as Olympics advisor (http://www.theregister.co.uk/2008/12/09/cpw_investigation/) to London Mayor Boris Johnson, and as chairman of National Express.
The FSA said any director securing personal loans using company stock would in future be required to the board within four days of a deal. The stock market must then be told within a further two days.
"The FSA can see no basis on which a director could legitimately avoid seeking clearance where his or her shares are to be used as collateral for a financing transaction," it said. ®