Upstart Swedish stock exchange loses licence

Financial authorities in Sweden said on Wednesday they were withdrawing the licence of the NGM Stock Exchange for actions which have violated the “trust and confidence” of the agency.

• Swedbank to ditch bonuses for 2009 (27 Jan 10)
• Bonus-happy banks risk tougher rules: Borg (13 Jan 10)
• Renewed criticism over Swedish bank bonuses (11 Jan 10)

Sweden's Financial Supervisory Authority (Finansinspektionen – FI) said the move was effective immediately, but granted the exchange six months to wind down operations.

“NGM has obstructed FI's supervision of the operations in several ways. Major owners, board members and the CEO have all been involved. Furthermore, the company has not been able to maintain a functioning and independent market surveillance,” the agency said in a statement.

The agency claims the exchange gave preferential treatment to its parent company, NGM Holding.

“Through its actions, NGM has squandered FI's trust and confidence to operate an exchange,” said FI.

In addition, the agency called for a halt in trading in shares of NGM Holding and ordered that one of the company’s major owners, Bo Lundevall, be banned from having any influence on NGM Holding, either personally or via his companies, Investment Stångsundet and Contact Marketing.

Launched in 1999, the NGM stock exchange first gained an operating licence in 2003 and currently has about 40 listed companies with a market value over 11 billion kronor ($1.6 billion), according to the company’s website.

The exchange was founded as an alternative to OMX, and specializes in small and medium-sized growth companies in the Nordic region.

While acknowledging NGM’s past problems, board chair Heléne Bergquist lamented FI’s move

“Finansinspektionen’s decision is very regrettable. The board which was elected on June 16th, 2008 has only been able to work a very short time with efforts to correct the problems which exist within the company,” she said in a statement.

She added that the newly-elected board was carrying out an in-depth investigation into NGM’s problems and wanted to demonstrate to FI that the company’s failings “were to the past”.

“We had hoped to convince Finansinspektionen that the ‘new’ NGM would continue following the comprehensive measures we’d taken,” said Bergquist.

Bergquist emphasized that the decision would have no immediate impact on the companies trading on the exchange and that activity would continue as the exchange wound down over the next six months.

She added that NGM’s board was considering appealing the decision and had called an extra meeting to deal with the situation.

NGM Holding has been plagued by several scandals recently, many stemming from the actions of its former CEO, Ulf Cederin.

Cederin, who resigned in March, was revealed to have used his company credit card for private purchases worth more than 100,000 kronor.

In addition, Cederin received stock from NGM Holding’s staff fund giving him more than 30 percent of the votes in the company, a threshold which required him to make a public bid for the entire company.

However, in order to avoid having to make the bid, Cederin instead transferred 500,000 of his NGM shares to his mother, according to the Dagens Industri newspaper.