Jan 26 - British sporting goods retailer JJB Sports has been fined 445,000 pounds ($704,000) by Britain's financial regulator for misleading the market by understating the cost of two acquisitions.

JJB Sports, Leeds, UK (photo by Mtaylor848)

The Financial Services Authority, clamping down on market disclosure and abuse in an effort to clean up the City of London financial sector, said on Wednesday it had fined JJB Sports for allowing a false market to be created in its shares.

JJB said in 2007 it had bought retail chain Original Shoe Company for 5 million pounds but failed to disclose at the time it also paid more than 10 million pounds for in-store stock.

A year later, the group said it bought another retail chain, Qubefootwear Ltd, for 1 pound but failed to mention it had also settled Qube's 6.47 million overdraft.

"In both cases, the cost of the acquisitions was insider information and should therefore have been disclosed to the market as soon as possible," the FSA said.

JJB said the episodes occurred under "entirely different management" run by former chief executive Chris Ronnie, adding it welcomed the finality brought by the conclusion of the investigation.

The company disclosed the real cost of the purchases alongside uncertainties about its financial future when publishing half-year results in 2008. It had had to arrange a short-term bridging loan to shore up its balance sheet.

(Reporting by Kirstin Ridley; Editing by Dan Lalor)