The Marketing Group rapped by NASDAQ as the past comes back to haunt agency network

Listed marketing network, The Marketing Group, has been rapped by NASDAQ for withholding inside information as dubious legacy issues surrounding previous management continue to plague the company.

A disciplinary hearing conducted by the First North Stock Exchange, a secondary NASDAQ market in Stockholm, found TMG flouted the ‘Rule Book’ by not disclosing information that would ordinarily have led to a trading halt.

TMG was formerly headquartered in Singapore and owns several Singaporean agencies.

TMG’s former chairman, Jeremy Harbour, who stepped down from the board in January but remained a major shareholder, was also found to have breached rules by posting “inappropriate and misleading” tweets that helped inflate the share value.

Harbour posted the tweets despite being warned not to by TMG’s business advisors.

Jeremy Harbour

TMG was fined 595,546 Swedish Krona (S$100,00) for the breaches.

“The Exchange considers the violations serious,” NASDAQ said.

The investigation into TMG’s historic approach to information disclosure, or lack of it, comes as current management strive to put as much distance as possible between themselves and the previous board led by Harbour.

Under chief executive Adam Graham, it overhauled its board and structure in a bid to bring more professionalism to the business and restore its damaged reputation.

TMG expanded rapidly in the months following its listing on the First North Stock Exchange in June 2016, with its share price soaring from an opening price of €1 to a remarkable €9 on the market’s close on August 1.

The network started life with three Singapore-based agencies – Black Marketing, Creative Insurgence and One9ninety – and UK-based Nice and Polite.,

It then embarked on a buying spree that included two more Singapore agencies, Imagine Group and Addiction Advertising.

But it quickly began to unravel, with previously-announced acquisitions, including a deal for three other Australian agencies, collapsing along with the share price.

It led to question marks about management ethics and claims the growth strategy was more smoke and mirrors than an attempt at genuine sustainable expansion.

Imagine Group, along with two other subsidiaries, Wilkin Marketing and Skye Multimedia, have since been divested as TMG looked to address poor performing agencies.

NASDAQ Stockholm found TMG guilty of several breaches, the first after the company told the exchange on July 25 last year that it knew of no reason why the share price had spiked so dramatically between July 18 and 25.

Yet later the same the same day TMG issued a press release announcing the acquisition of Ulysses Ltd.

The disciplinary hearing found TMG “did not inform the Exchange or its Certified Adviser that discussions were underway regarding an acquisition”.

NASDAQ also investigated a series of tweets made by Harbour regarding the company’s share price which it found were “inappropriate and misleading”.

In the tweets, Harbour made comments that “had a positive effect on the Company’s shares”.

“The fact that a listed company’s chairman of the board, despite encouragement by the Exchange and the Company’s Certified Adviser to discontinue similar tweets, nonetheless continues must be deemed to damage public confidence in the Exchange, Nasdaq First North and the securities market in general,” the disciplinary hearing found.

The exchange added that even if the tweets did not contain sensitive or inside information – as argued by TMG – “they could be interpreted as containing this type of information and thus affecting the price of the company’s shares”.

A third breach occurred when TMG delayed the announcement that the acquisition of three Australian firms was being discontinued.

A press release was published 22 hours after a decision was made by the company to withdraw from the deals. “Such a time delay cannot be deemed to be within the scope of the concept of ‘as soon as possible’,” NASDAQ said.

The share price tumbled 9% during that period with the Stock Exchange suggesting the “combination of inside information which had not been made public and the price drop meant that a leak could not be ruled out”.

In an interview with Mumbrella early last month, and before the NASDAQ investigation became public, Harbour denied any wrong doing.

“The key thing to remember is that that we are governed by NASDAQ and the Financial Conduct Authority in the UK,” he said. “We have to report every transaction to the FCA so all the governance is in place to protect against all that kind of stuff. There is no lack of transparency.”

CEO Adam Graham has attempted to distance The Marketing Group from the past

In a statement, TMG chief executive Adam Graham stressed the breaches took place prior to the appointment of the current board and said the company is indemnified against the fines.

All “reasonable steps” will be taken to ensure the cost is recovered from Harbour and two of his former fellow directors, Callum Laing and Toby Street.

“We are confident that we have dealt with the legacy issues and that TMG is in a stronger position than  it has ever been,” Graham said. “Historic failings have been addressed and a cohesive global marketing group is being established that I believe will deliver strong long-term shareholder value.

“I look forward to the future with optimism and to making further announcements concerning progress in due course.”

Graham told Mumbrella in August it was “very keen to create a line in the sand between the past and future” and suggested previous management had “got very excited”.

“It’s very important when running a public company to under promise and over deliver and I think my predecessors got very excited,” Graham said. “They are very ambitious and optimistic people and they haven’t run a public company before. As such perhaps expectations were not managed as best they could.”


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