BT Board Jumps In to Purchase Stock

BT Group directors and their relatives bought more than $700,000 of its stock Monday and Tuesday, providing a vote of confidence in the former British telecommunications monopoly one week after it suffered a 21 percent drop, according to Bloomberg.

The purchases, totaling more than 185,000 shares, were led by Anthony Ball, the former BSkyB chief executive officer and current BT board member, who bought 70,000 shares, and relatives of Chairman Mike Rake and audit & risk committee chairman Nick Rose, who bought 90,000 shares combined, according to a regulatory filing.

With the stock trading near three-year lows, the insiders are showing faith in BT’s long-term prospects, according to Richard Marwood, senior fund manager at Royal London Asset Management. BT fell the most in more than 30 years on Jan. 24 after disclosing a deeper accounting scandal in Italy and a weaker outlook for U.K. government contracts and corporate business outside its home country.

“You’d have to take it as a sign of confidence in the way that the management think that the share price reaction has been overdone,“ Marwood said in a phone interview. “BT is a fundamentally strong business, it just has some uncertainties around it at the moment and I think the share price could recover if we see some of those uncertainties get cleared up.“

Italian prosecutors in Milan have opened a criminal probe into the allegations of false accounting and embezzlement. In the U.K., the Financial Reporting Council, an accounting and audit regulator, said it’s looking into whether auditors fulfilled their duties and hasn’t decided if it needs to investigate formally. The country’s Serious Fraud Office said it’s aware of the allegations and wouldn’t comment further.