Market announcement

Title

LHV Pank to contest the Bank of Lithuania’s decision in court

Message

The Bank of Lithuania has reached a decision that AS LHV Pank (LHV) has breached
the Market Abuse Regulation in fulfilling orders related to a client's
securities, and imposed a fine 200 000 euros on LHV.

According to LHV, the position of the Bank of Lithuania is unfounded in terms of
the charges. External legal experts also came to the same conclusion; according
to them, LHV's activities have been correct and have corresponded to
international practices. At that, the Bank of Lithuania abandoned one of two
complaints in the course of proceedings. Considering the foregoing, LHV Pank is
contesting the Bank of Lithuania's decision in court.

The case at issue concerns the use of accelerated book building (ABB), a form of
large-volume sale of shares, in November 2019 by Central European Tour Operator
S.a.r.l. (CETO), a major shareholder of AB "Novaturas" (Novaturas) that is
trading on the Nasdaq Vilnius main list, in the case of shares of Novaturas. LHV
was appointed the lead bookrunner by CETO in this transaction, while operating
as a broker on Baltic stock exchanges as usual, mediating transactions of the
client.

According to the Bank of Lithuania, LHV breached the European Union Market Abuse
Regulation (MAR) Article 14 (a) pursuant to which, 'a person shall not engage or
attempt to engage in insider dealing'. In this regard, the Bank of Lithuania
considers CETO's indicative sales price, which became known to LHV's brokers and
which later turned out to be the final price of ABB, as inside information. The
content of the accusation is that knowing inside information acquired during the
ABB, LHV, as a brokerage company, mediated sale of shares transactions of the
client.

LHV does not agree with this position, and has repeatedly voiced its dissenting
opinion to the Bank of Lithuania. LHV believes that it has not breached any
regulations since:

  * During the ABB process, there is no trading ban and investors are free to
    trade in shares on a current basis;
  * All investors were informed of initiating the ABB by means of a stock
    exchange announcement
    (https://view.news.eu.nasdaq.com/view?id=bb72e19d387e44c17dac5233e343e86b0&l
    ang=en) and therefore, investors could take into account while trading on
    the stock exchange, that a major shareholder is selling shares by ABB;
  * Disclosing the minimum price of the ABB is not mandatory;
  * Agreeing on block trades without a minimum price is common practice;
  * In case of higher selling interest block trades are generally always at a
    lower price than current market price;
  * According to current rules, a stock exchange broker may also fulfil the
    orders of clients even if the broker possesses information about the
    transaction that qualifies as inside information.

Through these transactions LHV has not earned any illegal profit. As a
professional brokerage company, LHV has operated in compliance with all current
rules and taken common international practices into account. According to LHV,
the decision of the Bank of Lithuania does not conform with the Market Abuse
Regulation and appears to be based on subjective interpretation of the facts and
circumstances as we know those. LHV has repeatedly provided explanations on its
part, and these positions have been confirmed by international legal experts who
are familiar with the operation of stock markets. LHV does not agree to the
decision and is contesting it, in all courts instances, if necessary.


Priit Rum
LHV Communication Manager
Phone: +372 502 0786
Email: [email protected] (mailto:[email protected])