The Financial Conduct Authority (FCA) has fined Paul Stephany, a former fund manager at Newton Investment Management Limited, £32,200 for his conduct in relation to an Initial Public Offering (IPO) and a placing.
On two separate occasions, Mr Stephany submitted orders as part of a book build for shares that were to be quoted on public exchanges. Prior to the order books for the new shares closing, Mr Stephany contacted other fund managers at competitor firms and attempted to influence them to cap their orders at the same price limit as his own orders. The FCA found that Mr Stephany risked undermining the integrity of the market and the book build by trying to use their collective power. As a consequence, Mr Stephany failed to observe proper standards of market conduct. He was also found to have acted without due skill, care and diligence by failing to give proper consideration to the risks of engaging in these communications.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
'This matter underscores the importance of fund managers taking care to avoid undermining the proper price formation process in both IPOs and placings. These markets play a vital role in helping companies raise capital in the UK’s financial markets and when they are put at risk the FCA will take action.'
Notes to editors
- Final Notice: Paul Stephany
- The FCA’s proceedings against Mr Stephany were under the Financial Services & Markets Act 2000. There is a separate investigation into related events under the Competition Act 1998, to which Mr Stephany is not subject. The FCA publicised the Competition Act 1998 investigation on 29 November 2017 when the FCA issued a Statement of Objections. The FCA will make an announcement regarding the outcome of the Competition Act 1998 investigation in due course.
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.