Entertainment Rights has been fined £245,000 by the Financial Services Authority for failing to report a potential $14 million earnings hit in a timely manner, reports Sharecast.
The problem came from a deal to distribute DVDs in the US with Gold Key Home, which was originally signed by ER in December 2006. Sharecast reports that a change to the agreement, effective from July 2008, cut $13.9 million from 2008 group profits.
However, Entertainment Rights delayed telling shareholders, waiting 78 days before disclosing the news as it attempted to reduce the impact. When the news was revealed shares plunged 55 per cent in one day.
The company fully cooperated with the investigation and admitted the breaches to the FSA, meaning it qualified for a 30 per cent discount under the FSA early settlement discount scheme. If it hadn't done this, it would have been fined £350,000.
Shares in Entertainment Rights fell by 11 per cent in early trading today.