Financial watchdogs hit MyTravel with £240,000 fine

Sunday, 14 Jul, 2005 0

MyTravel has been fined almost a quarter of a million pounds by financial watchdogs after failing to tell the city of a £25 million black hole in its accounts.

The Financial Services Authority ruled that the operator withheld information in 2002 that would have had a direct bearing on its year-end financial performance.

MyTravel stressed its then chief executive Tim Byrne and chief financial director David Jardine had not deliberately misled shareholders or the market.

In a statement, the operator said it had withdrawn an appeal against the fine and “reached a settlement with the FSA without admitting its conclusions.”

FSA managing director for wholesale business Hector Sants, announcing a fine of £240,000, said: “The failure by MyTravel to update the market promptly about the exposures it had discovered was a breach of Listing Rules. MyTravel’s discovery of the exposure led to a change in its expectation as to its performance.

“The failure to announce this change denied the market the opportunity to assess the likely impact of these exposures on MyTravel’s share price.”

He described the disclosure of such information as a “fundamental protection for shareholders” and vital to the “smooth operation of efficient, orderly and competitive markets.”

The undisclosed accounting blunder related to £24.3 million that had been unaccounted for in the previous year’s accounts and was partly to blame for the operator’s £72.8 million loss that year.

MyTravel said Byrne and Jardine, who both departed the operator later in 2002, did not refer the matter to the board or seek professional guidance but expected the non-recurring loss would be offset by other non-recurring gains.

“As a result MyTravel’s overall profit forecast for that financial year remained unaffected,” a statement said. “As a result they did not believe that a Regulatory News Service announcement was required.”

The FSA said Byrne and Jardine “were not knowingly concerned in the contraventions” and that no individual action will be taken against them.

The fine will come as a blow to MyTravel which has emerged from a turbulent period and recently completed a financial restructure of the company. At its half-year results last month, the operator reported a “significant improvement” and was targeting an operating profit in 2006.

Report by Steve Jones