Woolworths has been fined £350,000 by the Financial Services Authority (FSA) for waiting too long to disclose price-sensitive information to the stock market. The fine, relating to an incident in 2005, is the second-biggest of its kind imposed by the regulator.

The sweets-to-DVDs retailer was censured for not immediately revealing that the terms of a contract were being altered through which its subsidiary, Entertainment UK, supplied CDs and DVDs to Tesco, hitting profits by as much as £8 million.

Tesco told Woolworths on December 20, 2005 that the contract was being reviewed, which should have triggered an immediate announcement to the Stock Exchange, the FSA said.

Instead, Woolworths waited for its Christmas trading update on January 18, 2006 before informing the market. News of the change then sent Woolworths shares plunging by 10 per cent.

The FSA said that the breach of rules was unacceptable, although it noted that the action “was not deliberate”. Woolworths said it accepted the ruling, but was pleased that the breach was found not to be deliberate.

The group said that the “significant costs, both in financial terms and in management time” meant it would not appeal. It will take the fine as an exceptional charge in this financial year.

The FSA has fined five companies in the past four years for failing to disclose market-sensitive information in a timely manner. Pace Micro, the set-top box maker, was given the largest penalty to date when it was fined £450,000 in 2005.

The FSA also has power to fine individual directors, although none was sanctioned in the Woolworths case. In 2004, Geoffrey Brown, the chief executive of Sportsworld Media Group, was fined £45,000 for failing to disclose sensitive information.

Explore Law

• Columnists

• Law Panel

• Law Reports

• Student Law

Times Recommends

• BGC 'set aside £40m to lure Tullett brokers'
• Legal aid review to ensure value
• Fears as 21 magistrates' courts face closure