Fingerprint Cards says former CEO arrested in market abuse probe

STOCKHOLM (Reuters) - Fingerprint Cards said on Monday its former chief executive and a board member had been arrested on suspicion of insider trading ahead of a profit warning by the biometric technology group in December. The Swedish Economic Crime Authority said it had carried out house searches and arrested two people on suspicion of aggravated insider trading after a substantial amount of shares were sold before Fingerprint Cards' profit warning. It did not name the people. The company said former CEO Johan Carlstrom and board member Lars Soderfjell had been taken into custody. "We take very seriously these events and the information that now has come to our attention. We are of course cooperating with the Swedish Economic Crime Authority," Fingerprint Cards Chairman Jan Wareby said in a statement. Fingerprint Cards' shares were down 7.5 percent by 1558 GMT. Carlstrom's lawyer Per Samuelsson said Carlstrom refuted the allegations against him. Soderfjell did not immediately respond to Reuters' requests for comment. Joel Westerstrom, analyst at broker Redeye said: "I don't want to judge before we know more. But it is crystal clear that already this news dents the market's confidence in the company." "While this isn't about the daily operations, a former CEO and a board member ending up in custody is never good." Fingerprint Cards, a global market leader in biometrics for smartphones, in December cut its revenue forecast for 2016 after overestimating demand for its smartphone touch sensors. Carlstrom was replaced as chief executive in 2014 after police began an investigation into insider trading. The company's then chairman said Carlstrom denied the allegations. He stepped down formally as CEO in 2015. Wareby told Reuters the company would assess Soderfjell's position on the board once it had talked to him and had more information on the allegations. (Reporting by Anna Ringstrom and Daniel Dickson. Editing by Jane Merriman)