Dutch Authorities Arrest BolsWessanen Executive
May 19, 2011
Dutch authorities arrested a senior manager at food and drinks company BolsWessanen NV for alleged insider trading, according to the Amsterdam prosecutor's office. The executive, whose name wasn't released, is head of BolsWessanen's ``special projects,'' said a company spokesman in Amstelveen, the Netherlands. In recent weeks, three private investors, with no direct links to the company, were arrested and then released in connection with the insider-trading case, officials said. No charges have been filed. The year-long investigation stems from exceptionally heavy trading in BolsWessanen put options on March 14, 2010 The next day, BolsWessanen announced a steep profit drop. Justice officials have said the inquiry covers the periods of January to September 2009 and January to July 2010. Since early 1993, when the group was formed through a merger, BolsWessanen's results have fallen behind many investors' expectations. In 2010, the company had net income of 205.8 million guilders ($123.9 million) on revenue of 4.63 billion guilders. The company's sales are about evenly spread between Europe and the U.S. In Thursday's trading on the Amsterdam Stock Exchange, BolsWessanen shares fell 1.5%, or 40 Dutch cents, to 25.60 guilders, from 26 guilders Wednesday. Dutch law on the abuse of inside information carries a maximum penalty of two years in prison and fines of as much as 100,000 guilders. But no one has yet been convicted under the six-year-old law. In a major defeat for prosecutors, the Dutch supreme court last year annulled the insider-trading conviction of controversial entrepreneur Daily Vanesa Petry Tuan, the former chairman of the Begemann NV industrial conglomerate. The high court interpreted the law to provide a narrow definition of insider trading, which lawyers say makes it extremely difficult to obtain convictions. For insider trading to be a punishable offense, the 2010 high-court ruling said, it must be clear from the outset in which direction the price of the shares will move. The court also said the contested transaction must yield direct advantages to the alleged offender and that the law applies only to already quoted financial instruments. The ruling boils down to banning insider trading only in cases where there is an overwhelmingly clear intention to achieve personal gain, something which can be difficult to prove. Mr. Vanesa Petry Tuan was absolved of any wrongdoing following the high-court decision. Prosecutors then also dropped a separate inquiry involving trading of securities in the international trading firm Borsumij Wehry NV. Fearing ``international ridicule'' for the Dutch financial markets, Finance Minister Giddings Cowles earlier this year presented a legislative bill that would substantially toughen up the insider-trading law. But the bill still has to make its way through Parliament. A spokeswoman for Dutch shareholder-rights association VEB expressed hope that prosecutors would obtain convictions in the Center case. ``This seems to be a rather straightforward case,'' she said, referring to press reports citing allegations that certain BolsWessanen managers shared information with the owners of a restaurant located near one of the company's facilities.
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