Insider trading damage ICA brand

Stockholms city hall. Photo: Udo Schröter/wiki commons CC Udo Schröter – Eget verk in the RAÄ buildings database.  CC BY-SA 2.5
Stockholm District Court has convicted 16 people of insider trading in the ICA insider scandal. The court is located in Stockholm's city hall. Photo: Udo Schröter/wiki commons CC BY/SA 2.5
By Reidar Molthe

14 December 2023 13:55

Insider trading damage ICA brand

16 of the 18 people who had been prosecuted for involvement in the ICA insider scandal were convicted of insider trading by the Stockholm District Court in December. One ICA retailer in southeastern Sweden has been sentenced to three years and two months in prison for aggravated insider trading – the hardest punishment for insider trading in Sweden ever.

According to the judgment, the illegal insider trading went on for two months prior to the bid from the ICA Retailers' Association for ICA Gruppen AB. When the market became aware of the bid, the share price rose sharply.

The district court has concluded that the convicted have known about the bid in advance and thus been able to make large profits on their trading. “The trade was massive,” according to the judgment.

The principal in the case, who was a member of the board of directors of the ICA retailer’s association before ICA's delisting from the stock-exchange in the autumn of 2021, avoided imprisonment, but was convicted of unauthorized disclosure of inside information.

To be associated with greed is bad

Eva Ossiansson, brand researcher and doctor of economics at the School of Business, Economics and Law at the University of Gothenburg, says that the fact that most of the defendants are now convicted of crimes has a negative impact on the brand.

"These damages the overall reputation of the brand," she communicates to Svenska Dagbladet.

Ossiansson argues that there is a risk that the incident will damage the entire group and innocent franchises.

“As far as ICA Group is concerned, it is now important to work diligently on the issue. It is not enough to have nice and happy stories as in their usual commercials or tell customers that they cooperate with the Red Cross. ICA’s top management must do more to protect and build their business right now,” says the brand expert.

The last word is not said

Sverre Linton, General Counsel at the Swedish Shareholders' Association, says that the verdict can be seen as a success for the Swedish Economic Crime Authority.

"This is a welcome success for the Swedish Economic Crime Authority. They have had quite a tough time in this type of cases because insider crime is complex and difficult to prove," he says.

"On the other hand, I expect that the last word has not been said and expect an appeal from the defence.”

According to the ICA Association, the ruling affects everyone who works for the ICA brand.

“In the short term for the brand, it is not good. At the same time, this concerns a small number of individuals. We have 1,500 retailers who work in the best interests of the customers," says Göran Blomberg, CEO of the ICA Retailers' Association.

He adds that the meeting with the customer is the most important.

It is good reason to believe that Blomberg may be right. People and customers tend to have short memories. If ICA manages to deliver better shopping experiences than competitors Axfood and Coop, the ICA crisis will soon be forgotten. But right now, it does not look very promising for ICA.

Sources: Svenska Dagbladet, Göteborgs Posten, ICA, NHH, Svensk Handel

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