The Uniti Group Ltd (ASX: UWL) share price plunged more than 17% yesterday after news of one of its directors is facing insider trading allegations.
Shares in the company recovered some of its losses before subsequently being placed in a trading halt.
The Uniti share price is now trading at $3.89, down 9% from where it was trading before the news.
What has been alleged?
Executive director of mergers & acquisitions (M&A) Vaughan Bowen is alleged to have sold 5.6 million shares in his previous employer, Vocus, in 2019.
The Australian Securities and Investments Commission (ASIC) believes the shares were sold while Bowen had undisclosed information regarding a takeover bid withdrawal for Vocus.
The information was released to the market the same day that Bowen sold shares, however, it was made after trading hours. Therefore investors could not act on the information until the following day.
Bowen denies the allegations and will be defending the matter.
What’s Uniti’s response?
The company released a response noting the allegations has no impact on Uniti:
The operations of Uniti Group will not be impacted. The Company’s business, and executive team, will continue as normal under the leadership of MD & CEO Michael Simmons.
The UWL Board does not intend to make any changes to Mr Bowen’s role and position of Executive Director (M&A) of the Company, which will continue, until the outcome of this matter has been determined.
What does this mean for the Uniti share price?
The market was clearly spooked by news of the action by ASIC. In the short term, I expect the news to weigh on the Uniti share price, while the allegations are dealt with.
Looking out a little further, I expect the news will have little impact on the underlying business, and therefore the Uniti share price.
My take
It’s always concerning when an employee of a company faces allegations by ASIC. It puts doubt in the mind of investors that wrongdoing may have occurred at the business, in this case, Uniti.
However, I don’t believe the allegations will have any material impact on the company.
The business will still keep digging up dirt, installing fibre and connecting premises to the internet.
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