Imogen Donovan by on Feb 12, 2020

A former Starbreeze executive has been convicted of insider trading

A former Starbreeze executive has been convicted of insider trading, as reported by Swedish financial news site Dagens industri (via Reddit).

A report from Dagens industri claims that an ex-Starbreeze executive has been convicted of insider trading, emerging from an investigation by the Swedish Criminal Investigation Authority. The organisation believed that two of the company’s (now former) managers had sold shares before restructuring was to be announced. Consequently, the executives were using information that had not been disclosed to the public and so other investors were placed at a disadvantage.

One of these individuals under investigation was founder and former CEO Bo Andersson. He was cleared of any charges because it was discovered that his bank pressured him into selling his shares ahead of the restructuring announcement. The other individual, who is not named, has been convicted of insider trading. According to Swedish law, the punishment equates to the to the profit generated through the crime, which is said to be more than $70,000. This will be repaid to the Swedish state. 

“The preliminary investigation has been completed and I have decided to bring charges of gross insider crime as I believe it has proven that the former manager had insider information on Starbreeze AB's difficult financial situation,” said chief prosecutor Thomas Langrot in a statement (translated via Google). “Information that the other market was thus not aware of until November 23 and December 3, 2018. Insider crime is a serious financial market crime that risks damaging trust in the stock market and in this case extra serious as it is a senior manager at the level of management who acts.”

Starbreeze’s situation is not good. In 2015, it was making Overkill's The Walking Dead, but crunch and delays caused the final product to suffer, and it was a commercial failure when it hit the shelves, in November 2018. As a result, Skybound Entertainment cut ties with Starbreeze Studios and cancelled continued support for the game and the upcoming console versions. The poor performance of Overkill's The Walking Dead made the company file for reconstruction, due to shortage of liquidity, only one month after its launch. To cope with the losses, Starbreeze sold the publishing rights of the games 10 Crowns, Psychonauts 2, and System Shock 3 to Mohawk Games, Microsoft, and OtherSide Entertainment respectively.

In June 2019, approximately a quarter of its employees were made redundant, and, in its most recent full-year financial results, it was revealed that Starbreeze’s losses amounted to $12 million while restructuring. Payday is Starbreeze’s last hope, with CEO Mikael Nermark confident that Payday 2 will continue to buoy the company into the future.

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