Dutch Court Annuls Fine on MF Global Trader for Fortis Comments

A Dutch court annulled a fine imposed on a former equity sales trader at MF Global Holdings Ltd. for spreading misleading information before the breakup of Fortis in 2008 and barred publication of a regulatory decision.

The trader’s comments, sent to investors as “sales commentaries” in July and August 2008, contained so many “subjective elements that it should be assumed it concerned an opinion” rather than factual knowledge, the Rotterdam Court ruled yesterday. “The information spread by the plaintiff didn’t send a misleading or incorrect signal,” the court said.

Willem Kadijk, 54, an ex-trader of the now bankrupt New York-based brokerage, was fined 24,000 euros ($31,454) for market manipulation by Dutch financial-markets regulator AFM in 2011. His messages contained “incorrect and misleading” information on a potential Fortis share sale, the price of the shares to be issued and the capital requirements, AFM said at the time. MF Global’s U.K. unit was also fined 384,000 euros.

“Kadijk will seek damages from the AFM,” Guido Roth, an Amsterdam-based lawyer at Spigt Litigators for the ex-trader, said today by phone. “Publication of the AFM’s decision made it impossible for him to find a new job, and the documents, which are available on the Internet, continue to haunt him.”

The AFM is considering whether to appeal the ruling, said Martijn Pols, a spokesman for the Amsterdam-based regulator.

MF Global didn’t appeal the AFM fine, making it final, the court said. Publication of the final AFM decision directed at the company would harm Kadijk disproportionally as it could lead to the impression his penalty was also upheld, the court said.

Fortis fell as much as 19 percent in intraday trading on July 15, 2008, and 16 percent on Sept. 15, and the firm issued two statements denying it was planning a share sale. The Rotterdam court said the trader’s messages were published at a time when there were more critical reports on Fortis, while the company’s own actions also triggered the shares’ slump.

Fortis sold parts of the company in a state-organized breakup in 2008 to avert collapse as the credit crunch worsened, customers pulled deposits and investors lost confidence.

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