Estonia, Financial Services, Investments, Legislation, Real Estate

Toomas Tool.

The prosecutor’s office launched criminal proceedings in the case in February 2009 at the notice of the Financial Inspection.

Tool is being accused of, while being an authorised representative of his wife, giving selling orders of a large amount of shares at a SEB account connected to his wife, to SEB bank broker Karoly Kirber on July 14-21, 2008. The order specified selling the shares at a price that became gradually lower.

The aim of that was to bring the market price of Arco Vara share below 0.56 euro, which enabled Tool to influence other large owners of Arco Vara in making decisions.

Altogether around 500,000 shares were sold this way and the result was that the bourse traders were mislead about the real market value of AS Arco Vara and the price of the share fell to 0.55 euro by the end of bourse day on July 22, 2008.

North Estonian district prosecutor Maria Sutt said that market manipulation is a very difficult to prove crime and the prosecutors’ office is glad that in the current case enough evidence has been gathered to enable to send the case to court. “Since we lack earlier experience of process based on that provision, and it is a very specific sphere, the court proceedings will certainly be complicated and full of disputes,” said Sutt.

Suspicions arose about the fact that Tool, who became last year a major shareholder of Arco Vara, managed to make his first share purchase at such a good time. Tool bought 5 million Arco Vara shares on July 4 last year with an OTC deal, becoming the owner of 5.25% of the company.

Five days later, Arco Vara announced of a stock buyback programme that companies use to support their share price. SEB organised the programme and when it started, Tool owned already 11% of the company.

Currently Tool’s company Freier Projekt OÜ is the biggest shareholder of Arco Vara with nearly 23.5% of shares.

Market manipulation can bring fine or up to 3 years in prison according to the Criminal Code.