Five Ubisoft executives accused of insider trading

Five executives from Ubisoft, including the CEO of Ubisoft Montreal, Yannis Mallat, have been accused of selling stock in the company while knowing about an imminent delay to Watch Dogs and The Crew, back in October 2013. All of the executives have denied the accusation from the French stock market regulator, Autorités des marchés financiers (AMF), and are currently disputing the long-running case, requesting for it to be nullified and seeking damages against the regulatory body.

Three of the men are based in Montreal: Yannis Mallat, Olivier Paris and Francis Baillet are all high-ranking executives at the company. Another two French executives remain unnamed. Ubisoft announced in October 2013 that they would be delaying the original Watch Dogs into the following year.

At the time, this caused the company’s stock to take a tumble of 26%, a common enough occurrence for large developers who announce long delays (the same thing happened to Take Two’s stock earlier that year, in the wake of a delay for GTA 5).

The five executives are alleged to have made deals to sell stock three weeks prior to the company’s announcement, while having knowledge of the upcoming delay. Such actions, if true, are against France’s insider trading laws.

Mallet denied the accusations in an interview with Québécois newspaper La Presse, saying that only Ubisoft’s President, Yves Guillemot, could make the decision to postpone the games.

“I had no information about the delay of Watch Dogs,” he said, “let alone The Crew, let alone the fact that the announcement would not provide a new launch date which, I think, probably had the most impact.”

He also complained about the regulatory body itself.

“All our explanations, all our testimonies, all our emails are ignored in a systematic way,” he told the newspaper. “Everything shows that the AMF has a poor understanding of how games are made.”

Responding to Kotaku, Ubisoft stressed that the company itself was not accused of anything, but that the staff members alleged of the crime nonetheless have the support of its founder and president.

“Those individuals vigorously dispute their implication in this matter and the AMF’s interpretation of the facts. Yves Guillemot, Co-Founder and CEO of Ubisoft, does not question the good faith of the people involved and has reassured them that they have his full support and trust.”

The five Ubisoft employees will now have to present themselves at a hearing in Paris on November 18 to the regulator’s sanctions board, a panel of judges and professionals who will review the case.


  1. lglethal says:

    I know rewarding senior management with shares is a common enough thing these days and done as a way to provide an incentive for the management to think of the shareholders and the good of the company (because apparently large salaries aren’t enough incentive? Sorry too cynical?). However, allowing those same managers to be able to trade in those very same shares while still working for the company has always seemed insane to me. It just seems to encourage these seemingly underhanded and seemingly illegal actions (I have no information, if what these particular managers did was illegal or if it was just coincidence that they sold there shares at this time, but it has the appearance of inside trading, and reflects poorly on the company and its controls over management).

    If a company really feels the need to give shares out like this. it should be stipulated that they cant be sold/traded until at least 5-10 years after the staff member has left the company. That would at least encourage the management to think on the long term future of the company and avoid any conflicts of interest. Of course, the fact that this encourages management to think long term and not on the immediate here and now, means it will never gain traction.

    I really should try to be less cynical, but its really really hard…

    • Crocobutt says:

      Cynical, or just realistic? You make really good points tho.

    • sleepisthebrotherofdeath says:

      At the company I work for no employee is allowed to sell/buy and company shares for a set number of weeks (think it is 2 weeks) before any financial quarterly reports. Not sure if that is a common thing. (And I’m assuming it’s not a secret practice either!)

      Also, 5-10 years is far too long. Would completely destroy the incentive: Imagine you are CEO, you make the company great, get loads of shares worth millions, but can’t sell then for 5 years. You leave the company (high up execs tend to move around quite a bit), new CEO comes in and destroys the company over those 5 years. Your shares are now worthless.

      • lglethal says:

        If a new CEO has destroyed the company you made great in just 5 years, then you should have done a better job selecting a successor.

        A company I previously worked for is slowly being run into the ground, because the CEO is not investing anything in R&D. His plan is to retire next year. And since the company has lots of cash and is paying good dividends to shareholders with all of that cash, he’ll have a great share price when he leaves in which to sell all of his shares in the firm. His successor will see the share prices begin to tank when he realizes he actually has to put that money that was going to shareholders into R&D to prevent the company being productless (and therefore destroyed) in the future. How is that good for the long term benefit of the company?

        Surely the current CEO should suffer for not thinking long term, rather then just punishing the new CEO for actually cleaning up the previous CEO’s mess…

        • aerozol says:

          “A company I previously worked for is slowly being run into the ground, because the CEO is not investing anything in R&D. His plan is to retire next year.”

          This is very common practice among investment companies as well – buy failing business, sell all stock at discount (don’t restock), profit margins look incredible since they picked it up, and then sell to sucker who then has to restock everything and then finds it extremely hard to run an actual profitable business/sell things undiscounted.

          Your CEO is just playing the capitalist game, and playing it well.
          (The capitalist game just throws bonus points at you for shitting on a lot of employees and investors, as we all know. But regulate that stuff? What are you, COMMUNIST?)

      • jmtd says:

        I think trading windows like this are standard practice. Just 2 weeks closed seems quite low, though, I think my firm has much smaller open windows.

    • natendi says:

      The company my bro works for has the policy of not allowing share sales before announcements/deals/after moving to new position, etc, to prevent this kind of behaviour. Also once shares are sold there are lots of restrictions on then trying to buy more in the future. This is apparently common across that sector (private equity) in the UK.

      Whilst insider trading is really bad and depressing, some companies do try to promote/enforce ethical behaviour!

    • Jamison Dance says:

      Dunno how it works in France, but in the US executives are usually rewarded in stock options instead of salary for two reasons.

      1. You pay much lower taxes on income from stock vs income from wages. The current highest income tax bracket is 39.6%. If they made $5 million they would pay around $2 million in taxes. Capital gains tax caps out at 20%, which means $1 million on $5 million in stock options.

      2. The tax code prevents businesses from counting CEO pay pay above 1 million as an expense unless that pay is tied to performance. That means if they pay the CEO $10 million in cash, the business pays taxes on $9 million of it and then the CEO pays income takes on all of it as well. However, pay that is tied to performance isn’t subject to this tax penalty. Stock options fit that legal definition, since theoretically if they do their job well, the stock goes up. Planet Money has a great episode on this.

    • ThePuzzler says:

      I once worked for a gaming company that had at one point (before I joined) given all employees shares (or maybe it was share options) in the firm.

      At a time when most of us suspected we were going to go bankrupt, it became clear that the finance deparment were getting bombarded with ‘how do I sell my shares?’ requests – they sent out mass emails saying (a) To sell your shares (bla bla bla). (b) Remember to only sell your shares if you were going to do this anyway, because insider trading is illegal.

      I got the impression that insider trading is something everyone does if they think no-one is watching. Most people have a hard time even understanding why it’s illegal.

      • Unclepauly says:

        As do I. I guess it depends but if I know a company has a bad future shouldn’t I sell my shares? Nope. You gotta go down with the ship is the thinking. From an honor standpoint it makes sense, but not from a personal bank account perspective. kek

        • Sirius1 says:

          Perhaps it makes a little more sense if you consider it’s not just you *selling* your shares, it’s someone else *buying* them. How fair is it to sell shares you know are going to tank to someone who doesn’t have that information?

        • aerozol says:

          It’s not just about honour, it’s about maintaining trust in the sharemarket.
          If people with inside information can sell shares they know will tank (and buy them when they know something is going down that will make them rocket) buying shares becomes a risky idea for your ‘outside’ investor, and the whole market plummets.

    • jmtd says:

      It’s unreasonable to bind somebody with terms 5-10 years after their contract has ended. Many software engineering contracts have a no-competition clause in them which states you can’t work for a competitor for some time after leaving a firm, often 6 months, but these terms are generally regarded as legally unenforceable.

      • Premium User Badge

        ooshp says:

        Oh really? Good info, I was actually in that position within 6 months of finishing a contract – I wasn’t in any hurry so it didn’t end up being an issue, but I’ll definitely get some legal advice if it comes up again and the 6 months period is going to get in the way.

  2. soijohn says:

    This happening when you got that arsehole Bolloré (head of Vivendi and hated in France for killing off a famous independant media outlet), now happy majority share holder of Gameloft and soon Ubisoft, trying to take over the company is freaking interesting, ain’t it ?

  3. Blackcompany says:

    Wait…delays to Ubisoft release dates are considered Insider-only information?

    Hmm…and here I just assume they will happen as an automatic part of the process…

    • Unclepauly says:

      Only if you know about it before it happens. You still have a point though, it’s inevitably coming the question is just “when”.

  4. Premium User Badge

    ooshp says:

    A bunch of executives claim they had absolutely no idea there were going to be delays announced? Either they’re so pathetic at their jobs they’re not trusted with this information or they’re telling massive pork pies.

    Also the president should be a little more intelligent with telling his corporate sector to hold trading if they truly are in the dark about these announcements. Again, either incompetence or dishonesty. Neither being particularly surprising from Ubi.

  5. corinoco says:

    “No, your honour, I had absolutely no idea what was going on in the company that in am CEO of. Oops, time for my daily bonus [cha-ching!]”