Kone CEO and secretary of board suspected of insider trading

Police complete investigation of Antti Herlin and Tapio Hakakari

Antti Herlin

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Police have completed their preliminary investigation into allegations of stock market insider trading by Antti Herlin, CEO of elevator and escalator manufacturer Kone, and Tapio Hakakari, the secretary of the corporation’s board of directors.
      The economic crimes unit of the Helsinki Criminal Police confirmed on Friday that the material from the preliminary investigation has been handed over to the suspects for a final statement, which they must give by the 20th of September. After that, the material is to be submitted to the Prosecutor General’s office for the possible filing of charges.
      The police investigation is only the third in Finnish history involving suspicions of aggravated abuse of insider information, a crime which carries a mandatory prison sentence. Those convicted of ordinary insider trading usually get off with a fine.
     
The investigation began after the Finnish Financial Supervision Authority (RATA) filed a complaint with the police.
      The investigation focused on the purchase of millions of euros worth of shares in Partek by Security Trading, an investment company owned by the Herlin family, in late 2001 and early 2002.
      Security Trading bought the shares before Kone, which is controlled by the Herlin family. Soon after that, Kone made an offer for the purchase of Partek shares owned by the state. News of the offer significantly raised the share price of Partek.
     
Initially the police investigations involved a larger group of people, but later the focus of the investigation shifted to Antti Herlin and Tapio Hakakari.
      Security Trading acquired a total of 370,000 shares of Partek in 2001-2002, making it the largest single investment in the Herlin family portfolio. The Kone offer boosted the Partek share price from about EUR 12 to more than EUR 15; Security Trading later sold its Partek shares at a profit of about EUR 1.5 million.
     
At the time, Security Trading, the main holder of Kone shares, was managed by Tapio Hakakari. The voting shares of the company were controlled by Kone’s chairman of the board Pekka Herlin and the vice president Antti Herlin.
      Police suspect that the managers of the family company’s assets were also involved in the planning of the offer to buy Partek in 2002, making it easy to manipulate the value of Partek shares and generate a profit of EUR 1.5 million.
      Helsingin Sanomat has learned that Antti Herlin and Tapio Hakakari were heavily involved in negotiations on the Partek shares with representatives of the state.
     
Both Herlin and Hakakari refused to comment on the matter on Friday. Both are on record as having denied any illegal activities.
      Hakakari has sharply denied any possibility that the three could have abused inside information. He said that no such information was available when the family company acquired the Partek shares.
      "We felt that Partek was undervalued, and we knew the sector. That is why we bought the shares for Security Trading, as a pure financial investment", he said in 2002.
      The last time that the Herlin family’s investment company bought Partek shares was in early April 2002, about a month before discussions began between Kone and state representatives.
      "At Kone we had not considered the purchase of Partek for very long. At the time that we met the state representative, we had lost in competitive bidding for the door manufacturer Besam just a couple of weeks earlier", Hakakari said in August 2002.


Previously in HS International Edition:
  Police suspect Kone CEO of insider trading with Partek stock (23.5.05)
  Kone to be split into two corporations - stock exchange listings for both (18.8.2004)

Helsingin Sanomat