Entrepreneur Stelios Haji-Ioannou could face a Department for Trade and Industry investigation after admitting to a breach of City disclosure rules over the £17m sale of part of his stake in EasyJet.
The founder of the Easy business empire announced yesterday morning that he had offloaded 2% of the airline. He said he needed funds for a legal battle with Hollywood studios, which are refusing to release blockbuster movies to his new EasyCinema budget complex in Milton Keynes.
He later admitted that he had failed to follow strict rules under the Companies Act, designed to keep investors informed of changes in big shareholdings.
In a hurriedly drafted apology, Mr Haji-Ioannou revealed that his selloff was in two parts: a placing of 3m shares on June 10, followed by 4.5m placed yesterday by stockbroker Credit Suisse First Boston.
Mr Haji-Ioannou admitted that he should have announced the first part of the sale at the time it took place. He failed to do so because he mistakenly thought it was below the threshold for public disclosure.
"I understand this sort of oversight is common amongst fund managers due to the generally prevailing confusion about the correct number of shares in issue," said Mr Haji-Ioannou. "In future, I will make sure that I am personally more up to date with the current number of shares in issue at any given time."
Mr Haji-Ioannou's mistake is likely to anger other investors in EasyJet. A large placing is often followed by a fall in the price - which means that, if he had followed the rules, Mr Haji-Ioannou might have made less money from his second transaction.
A spokesman for the DTI last night said: "Nobody has put in a formal complaint to us about this. But we would certainly investigate things if somebody brought them to our attention."
Mr Haji-Ioannou stepped down from EasyJet's board last year to devote his attention to new businesses such as EasyCinema, EasyPizza, EasyCruise and a budget accommodation concept, EasyDorm.
The first bright-orange EasyCinema opened in May, charging as little as 20p a ticket. It has struggled to attract big audiences because it is showing "second run" films - current features include About a Boy, Phone Booth and Anger Management.
Mr Haji-Ioannou has blamed Hollywood film distributors, claiming they are deliberately withholding new releases.
He is considering either a complaint to the EU competition commissioner, Mario Monti, or a court action against six companies: Twentieth Century Fox, Disney, Warner Brothers, United International Pictures, Columbia Tristar and Entertainment Film Distributors.
James Rothnie, director of corporate affairs for the EasyGroup empire, said litigation would involve confronting "some of the world's largest companies, with six very expensive teams of lawyers".
"The only way Stelios and EasyGroup can raise money is by selling shares - we have no other source of income," Mr Rothnie said. "Stelios doesn't draw a salary or any expenses from his EasyGroup companies."
EasyGroup claims Hollywood dislikes the idea of people seeing movies at rock-bottom prices. Distributors deny this, insisting that Mr Haji-Ioannou is simply not offering them enough money.
One source in the film distribution industry said: "There's no problem doing business with him; he's got accounts [for second-run films] with nearly every distributor in town. But, if you can't pay for a business-class seat, you have to travel economy class."
