The board member selling shares prior to the bankruptcy of Scanmining, the Swedish mining company, is sentenced to jail for one and a half year and fined for 2,8 million SEK. This is the most severe conviction so far in Sweden for insider dealing according to the prosecutor Yngve Rydberg at the Swedish Economic Crime Authority.
In December 2007 the board in Scanmining filed for bankruptcy. The mine in Blaiken did not deliver expected success and the company had faced difficulties with production, loss of income and lack of capital for some time.
This was not public information when the board member started selling his shares. During the period between October 2006 and January 2007 he sold 1,8 million shares for a total of almost 32 million SEK. Shortly thereafter he left the board of Scanmining.
The District Court of Stockholm concluded that the board of Scanmining had, during the autumn 2006, the knowledge that the financial situation of the company was actually worse than communicated to the market. The board member was aware of this and possessed inside information on each occasion when selling the shares.
The former board member was found guilty of severe insider crime and fined for 2,8 million SEK on top of 1,5-year imprisonment.
The maximum penalty in Sweden for severe insider crime is four years imprisonment. The previous record was 8 months in the so-called Pinkerton case in 1999.