The rules state that a party which acquires 5 percent or more of the shares in a listed company must disclose the acquisition. In this instance, both companies acquired more than 5 percent of the shares in Song Network Holding AB without openly disclosing the acquisitions.
On September 24, 2004 J.P. Morgan acquired more than 5 percent of the shares in Song Network. Song was the target of two competing public offers at this time, which made the change in shareholdings in the company of considerable interest to the market. However, J.P. Morgan did not disclose the acquisition in time as well as failing to inform the Exchange. In addition, on September 30, 2004, J.P. Morgan sold so many shares that its shareholding fell below 5 percent, again failing to notify the Exchange of this change.
Lehman Brothers also acquired more than 5 percent shares in Song on September 28, 2004 and failed to follow the Exchange’s procedure.
Stockholm Exchange’s Disciplinary Committee adjudged both J.P. Morgan and Lehman Brothers of disregarding generally acceptable practices in the Swedish securities market and therefore decided to warn each of the two companies. A repeat incident could lead to hefty fines.