Martin Hynes, former chief executive officer of Universal, has also been fined £10,000 for being knowingly concerned in the breach.
The FSA found that Universal breached the listing rules by failing to notify the market of the loss of a major contract- with insurer Direct Line - which was likely to lead to a substantial movement in the price of its listed securities. Hynes was the director best placed to take the appropriate steps to ensure that Universal notified the market without delay once the obligation was triggered on the April 16 2002. Universal did not make the announcement until the April 23 2002. The announcement also reported worse than expected trading figures. The company's share price fell 55% on the day of the announcement.
Andrew Procter, FSA director of enforcement, says: "The delay, and therefore this enforcement action, could have been avoided entirely by the taking of responsible preparatory measures by the company when it first emerged that the contract might not be renewed. Mr Hynes was aware of this development and was the director best placed to ensure that Universal complied with its obligations under the listing rules.
"The obligation on listed companies, and their directors, to inform the market without delay of any changes to their business is a fundamental protection for shareholders.”
Universal won its contract with Direct Line in 1998. By March 2002 it accounted for approximately 40% of the vehicles it handled.
Direct Line first told Universal that it intended to terminate this contract at a meeting on March 18 2002 attended by, among others, Hynes. Universal tried in correspondence to persuade Direct Line not to terminate the contract, but Direct Line confirmed the termination in a letter received by Universal on April 16 2002.
In deciding the appropriate fine for Universal and Hynes the FSA gave credit to both parties for their co-operation in the investigation and in resolving the matter expeditiously.