A former Starbreeze manager has been convicted of insider trading.
According to Dagens Industry (via Google Translate and Videogamer), the former Starbreeze employee was charged with selling off shares before the firm’s financial issues and restructuring plans came to light in November 2018.
While founder and former CEO Bo Andersson Klint was initially implicated, he was later cleared of any charges. The other as yet unnamed individual has been convicted of insider trading but denies wrongdoing.
“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,” chief prosecutor Thomas Langrot said in a statement. “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.”
The defendant was charged by the Swedish Crime Agency in September 2019 following allegations that by selling shares early, they reduced their losses. The conviction includes a financial penalty of 700,000 SEK (c. £56,000) and a further fine of 38,000 SEK (c. £3,000).
Starbreeze’s headquarters were raided by police following reports of insider trading back in December 2018, leading to at least one arrest and the seizure of equipment, including computers and documents.
“[The] Swedish Economic Crime Authority has conducted a search query at Starbreeze AB,” Starbreeze said in a full statement at the time. “The company has been informed that this has occurred due to suspicions of insider charges. The company as such is not subject to any suspicion. The company cooperates full [sic] with the Swedish Economic Crime Authority. The event does not affect the company or the ongoing business reconstruction. Starbreeze has no further information on the matter.”
The Payday 2 developer submitted an administrator-approved plan to the Stockholm District Court in November 2019 to allow the studio to repay its debts after it revealed in August 2019 that it had closed the second period of the financial period with an EBITDA (earnings before interest, tax, depreciation, and amortization) loss of SEK 25.8m/$2.7m.
Starbreeze hopes to repay the debts they had accrued as of December 2018 within five years, with an interest rate of 5 per cent. The plan is intended to allow Starbreeze to repay the company’s creditors, who are separated into two categories: “supplier creditors” who are owed over SEK 1.04m/$107,000, and “minor supplier creditors” who are owed less.
While the PayDay developer continues to sell off its assets – most recently Psychonauts 2 and 10 Crowns – and has bumped up net revenue by SEK 14.4m, the sale of the publishing rights generated SEK 137m, which accounts for a whopping 85.6 per cent of the company’s total revenue over that period. PayDay 2 continues to be the studio’s key income generator but that too has seen a significant drop, earning just SEK 14.5m compared to last year’s SEK 31m.
Most recently, 505 Games parent company Digital Bros. moved to acquire Starbreeze AB’s assets for €19.2 million (£16.2m).