AP1’s former CEO was fired as a result of buying shares in an initial public offering (IPO) that he had already decided the Swedish pension fund would participate in as a cornerstone investor.
Johan Magnusson was sacked by the SEK352bn (€32.7bn) state pension buffer fund’s board on Monday, with a statement citing a breach of internal regulations.
AP1 published more details about the affair this morning following its initial announcement of Magnusson’s sacking.
The fund backed the IPO of Swedish property company John Mattson Fastighetsföretag earlier this year as an anchor investor.
“The decision to participate in an initial public offering was made by CEO Johan Magnusson. Johan Magnusson also subscribed to the offering privately,” AP1 said.
The pension fund did not reveal the size of Magnusson’s personal investment in the company, but according to AP1’s listed shareholdings list, the pension fund’s shares in John Mattson Fastighetsföretag were worth SEK317m at the end of June 2019.
Following the allocation of shares and completion of the IPO, AP1 said Magnusson then registered the transaction in its compliance systems.
The pension fund’s compliance unit deemed the deal to have violated the regulations prohibiting an employee from using their knowledge of the fund’s investments, or from trading in financial instruments in which AP1 was trading or was expected to trade in.
“In addition, the regulations prohibit an employee who is entitled to place orders on behalf of the fund from placing orders for themselves at the same time, or immediately before or after,” it said.
The incident also violated the fund’s values and ethics policy and its policy for handling conflicts of interest, the pension fund said.
AP1 chair Urban Hansson Brusewitz was made aware of the incident during the summer.
Meanwhile, an excerpt from minutes of AP1’s supervisory board meeting on 30 August and subsequent telephone meetings, published by the fund today, revealed that Magnusson’s 18-month notice period was being respected, even though he was dismissed with immediate effect.
A spokeswoman for the fund confirmed that he would continue to receive his SEK356,000 monthly salary, meaning he was due to receive a total of around €595,000 in salary over the next year and a half.
The case it not being referred to the Swedish police or other authorities, she said. “We have no reason to suspect a crime – it’s a violation of an internal regulation,” the spokeswoman told IPE.
The fund said it had decided to go public with more information as it had concluded its assessment of the need for confidentiality in accordance with the Swedish Public Access to Information and Secrecy Act in relation to the data.