The Financial Services Authority has fined set-top box manufacturer Pace Micro Technology plc 450,000 pounds for breaches of market rules which occurred in 2002.

The problem arose after ntl, a major customer which accounted for nearly half of the revenues for Pace, had been experiencing well-publicised financial difficulties and cut an order for 450,000 set-top boxes to 300,000. Trade credit insurance cover on future shipments was then withdrawn, meaning that future payments owed by ntl were no longer guaranteed.

The FSA found that Pace failed to ensure its published interim results included all relevant information and then failed to update the market about its change in revenue expectations. When Pace did alert the market as to its financial position on 5 March 2002, its share price fell nearly 67% from £3 to £1 in a single day.

Following the announcement of the ruling, shares in Pace recovered 8 per cent to 40p. Pace said the £450,000 fine and associated costs were likely to be accommodated within a £1.5 million provision it had previously set aside, adding that it was not in the best interests of shareholders to continue with an appeal process.