Holmgren Steps Down as Cherry CEO Amid Insider Trading Accusations
Anders Holmgren officially stepped down as the president and chief executive officer of Cherry AB on May 25 because he was being investigated by authorities for allegedly committing insider trading.
Suspected of Insider Trading
Holmgren had been under investigation after it was alleged he was involved in insider trading before he left Cherry AB. The former chief executive officer came under suspicion following an unprecedented change in fortune for the company.
According to its 2017 Q3 financial report, Cherry AB had been performing poorly in 2017. The report revealed that the company had a negative profitability trend that was forecasted to continue into the future. Audit reports further revealed that the poor performance of the company had been caused by challenges that came from its acquisition and failed integration of ComeOn Malta Ltd., a Malta-based betting firm.
However, in spite of analysts’ predictions that Cherry would go on registering a poor performance following its 2017 Q3 report, everyone was surprised in 2018 when the company released its 2018 Q1 financial report. This report showed a 26 percent rise in the company’s profits, which translated into a value of more than $76 million. This report was considered suspicious because not only had analysts forecasted that the company would continue to have a poor performance but also because it had rebounded to such a great extent in just three months.
Consequently, the Swedish Economic Crime Authority started to investigate the company at the start of 2018, and, following a raid of the company’s head office, gathered enough evidence to link Holmgren to insider trading. The former president and CEO was officially arrested May 22. He later stepped down from his role three days later on May 25.
Stepped Down or Fired?
Holmgren’s exit from Cherry AB has caused some confusion and uncertainty because of the conflicting reports between the company’s board of directors and Holmgren himself.
On the one hand, Holmgren said that he had decided to step down because he wanted to give the authorities the opportunity to conduct their investigation. However, the company’s board of directors said that it had decided to terminate Holmgren’s contract. The chairman also cited the allegations levied against him, as well as the investigation, as its reasons to do so. However, whatever the case may be, Holmgren will not be involved in any of the future operations of the company.
Interestingly, Holmgren had served as Cherry AB’s chief executive officer and president for only two years before he found himself caught up in this scandal. He rose to the top on an interim basis and, eventually, he was permanently appointed to the top position following the exit of the former CEO, Fredrik Burvall. Before becoming CEO, Holmgren had served in other lower-level executive positions in the company, most significantly as the manager of Betsson’s Malta division.
Remedying the Damage Done
Cherry AB has been plagued by many challenges since news of Holmgren’s arrest for insider trading got out. The most significant impact from this revelation has been a drop in the share prices of the company. Cherry’s stocks (STO: CHER-B) traded at SEK66.20 following Holmgren’s arrest. The company has also lost the trust of some of its clients and shareholders.
However, Cherry AB has been taking measures to remedy the damage caused by Holmgren’s arrest. For starters, the board of directors quickly replaced Holmgren with Gunnar Lind, a member of the board of directors and a former CEO himself. He served in the position from 2004 and 2011. The company has said that it would cooperate fully with authorities throughout the investigation.
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