February 2, 2018 / 8:33 AM / 10 months ago

Police launch criminal investigation into tire maker Nokian

HELSINKI (Reuters) - Finnish police plan to launch a criminal investigation into options trading at Nokian Tyres stemming from manipulated product tests, darkening the mood after the company reported rising quarterly profit on Friday.

FILE PHOTO: Nokian tyres are on display at the "Krepost" Toyota dealership in the Siberian city of Krasnoyarsk, Russia August 8, 2014. REUTERS/Ilya Naymushin/File Photo

The police action follows lengthy investigations by the country’s financial watchdog after Nokian said in 2016 that it had supplied special high-quality tires for tests by motoring journalists, leading to stronger test scores that helped garner good publicity.

The watchdog had asked the police to investigate whether Nokian misused insider information or breached disclosure laws.

In 2016, shares in the company fell after it admitted the use of high quality tires in tests. Daily Helsingin Sanomat later reported that some members of the company’s management team had sold options before it went public about the issue.

“The National Bureau of Investigation (NBI) has opened a criminal investigation into suspected securities market offences related to tyres manufactured by Nokian Tyres plc and the tyre test results in different magazines,” the police said in a statement on Friday.

The company’s view is that no crime had occurred, a spokesman told Reuters.

“It is good that the matter will be resolved,” he said.

Nokian shares fell 6.8 percent in early trade on Friday.

Nokian Tyres has said the use of special tyres happened in the past but they have discontinued the practice and that their tests in its main markets have been reliable for years.

It had launched an internal investigation into the matter in October 2015, and the reported option trades took place in October and November 2015, before the company went public with the past practices.

Nokian earlier on Friday said its fourth-quarter operating profit rose 13 percent from a year earlier and that it expected growing sales and profits for this year.

Reporting by Jussi Rosendahl and Tuomas Forsell; Editing by Keith Weir

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