Dodgy dealings tarnish IT industry

In the latest case of questionable ethics to hit the headlines, a director at Sema, the Anglo-French software and services company, sold £24m worth of shares during a closed period - the two months before company financial results are announced when directors are forbidden to trade their own shares

Not satisfied to stop there, said director, Hartmund Lademacher, then failed to report the sale to the company for another month, well past the five days required by law.

The news of Lademacher's blatantly illegal share dealing helped Sema's shares to plummet from 620p last Friday morning to 318p on Tuesday morning. He resigned on Wednesday night.

IT companies have a credibility problem at the best of times. After all, many buyers don't understand what they're buying, and a depressing percentage of projects come in late and over budget. So a spate of stories about insider trading and accounting irregularities only makes the industry look that much more dodgy.

This is a story we could see repeated more often as shares head southward this winter. Directors looking to cash in on still-respectable prices may see the millions to be made before they see FSA and SEC regulations.

The FSA may be its own worst enemy here. Insider trading can destroy both companies and the reputation of an industry. The regulator should have at its disposal a censure more severe than a reprimand.

At the moment, consumers have more rights if builders fail to install their kitchens properly than shareholders have if the director of a company cuts the share price in half with unethical or illegal practices.

But most of all the industry needs to come down hard on these practices. If ever an industry needs a squeaky-clean image, it's IT.