No insider trading charges against Kone CEO

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Antti Herlin, CEO of the elevator and escalator manufacturer Kone, and Tapio Hakakari, secretary of the corporation’s board, will not be charged with aggravated misuse of insider information.
      A criminal complaint against the two was initiated by the Finnish Financial Supervision Authority (RATA). Police investigated why the investment company Security Trading, which is owned by the Herlin family, acquired millions of euros worth of stock in Partek from late 2001 to the spring of 2002. The investment company bought the shares before Kone made a purchase offer for the state-owned shares of Partek.
      The offer sharply boosted Partek’s share price.
     
The key issue under consideration by prosecutors was, at what point the consideration by the Kone management concerning Partek turned into a concrete project or plan. The decisive factor was if Herlin and Hakakari bought the Partek shares for the family’s investment company during the consideration phase, or if a concrete purchase plan had already been made.
      When a concrete plan exists, the company’s management has insider information.
      State Prosecutor Pekka Koponen and District Prosecutor Kari Penttinen said that there were many factors supporting the possibility that a concrete plan would have been in place in Kone for the purchase of Partek stock.
      On the other hand, many aspects in the preliminary investigation suggest that a project for the acquisition of Partek may not have been in place.
      Koponen says that there were two completely plausible sequences of events, which are equally likely, and that it is impossible for an outsider to say which is the most probable. "Therefore, there was no other possibility left than not to prosecute", Koponen concluded.
     
The examination of Partek by the main owners of Kone began when Hakakari launched Project Zetor in late 2001. One of the aims was to find a new company to help Kone grow.
      The prosecutor felt that the calculations linked with the project were not made for the benefit of Security Trading, and that there were evaluations taken from the point of view of Kone. These other notations support the idea that insider information may have been misused.
      Speaking against the misuse of insider information is the fact that Kone was also preparing a bid for the purchase of the door manufacturer Besam. The company could not have afforded two large purchases.
      The prosecutors therefore found that inquiries into a purchase of Partek began "at least on the general level already in late 2001". However, it is possible that the concrete Partek project did not come about until the Besam project had been abandoned in the late spring of 2002.


Previously in HS International Edition:
  Kone CEO and secretary of board suspected of insider trading (29.8.2005)
  Police suspect Kone CEO of insider trading with Partek stock (23.5.05)

Helsingin Sanomat