Cherry CEO Arrested on Suspicion of Insider Trading
Anders Holmgren, the chief executive officer and president of Cherry AB, was arrested last month on suspicion of insider trading. Holmgren, who had served in the position of CEO for about two years, had been under investigation for his involvement in manipulating the prices of the company’s shares.
A Surprise Raid
The Swedish Economic Crime Authority had been investigating Holmgren for some time before eventually deciding to raid and search the company’s head office May 22. The raid was unexpected and caught everyone, including Holmgren, by surprise. The authorities reportedly recovered evidence linking Holmgren to insider trading.
Forced to Step Down
Holmgren was arrested at the company’s head office by the Swedish Economic Crime Authority immediately following the raid. Two days after his arrest, Cherry AB released a statement saying Holmgren was no longer the chief executive officer.
Before this announcement, Holmgren had been recorded saying he had decided to step down as CEO as a way to allow the authorities to finalize their investigation. The company’s board of directors, however, did not support this claim. According to its report released May 25, Morten Klein, chairman of the board of directors, said the board decided to terminate Holmgren’s contract as a result of the charges levied against him by the Swedish Economic Crime Authority.
Sequence of Events Leading to Arrests
The sequence of events leading up to the arrest of Holmgren began in 2017 after Cherry AB released its Q3 report. The report revealed the company had been losing money and even established an unprofitable trend. This was mainly blamed on the difficulties that arose from the acquisition and integration of ComeOn Malta Ltd.
This trend, however, changed abruptly in April of this year after Cherry released its Q1 report for 2018. The report revealed the company had made a 26 percent improvement, reaching more than $76 million in just three months. The report was extraordinary to say the least because it beat the predictions made by analysts.
So extraordinary was this financial report that authorities became interested in the sudden turn of events. Investigations revealed Holmgren had bought a significant number of shares just three weeks before the Q1 financial report was released. Further investigations revealed Holmgren had been involved in manipulating the value of the company’s shares in a bid to improve its standing in addition to profiting from it.
A Brief Stint for Holmgren
Holmgren became the company’s CEO in January 2017 on an interim basis following the exit of former president and CEO Fredrik Burvall. He was later appointed to the role permanently after showing competence and good management and leadership qualities.
Holmgren had served in several executive positions at Cherry before he was appointed CEO. He co-founded Betsson, another betting company that spun off from Cherry. Holmgren served as Betsson’s manager in its Malta division.
Cherry Picking up the Pieces
Holmgren’s arrest and dismissal came with several setbacks for the company, which is based in Stockholm. It briefly disrupted normal operations at the company and had a negative impact on Cherry’s reputation. Consequently, the value of its publicly traded shares was also affected. Cherry’s shares (STO: CHER-B) were trading down 3.64 percent, with prices standing at SEK66.20 per share.
Cherry, however, was quick to respond and begin recovery efforts. The board of directors announced that Gunnar Lind, a member of the board since 2013, would take over as chief executive officer. Lind had previously served as Cherry’s CEO and president from 2004 and 2011. The company also said that it would fully cooperate with the authorities.
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