The Financial Conduct Authority (FCA) has fined a former fund manager of Newton Investment Management for conduct in relation to an IPO and a shares placing relating to two companies.
Paul Stephany, who managed four UK equity funds, has to pay £32,200 (€36,500) for his conduct in relation to the IPO of On The Beach Group and a placing by Market Tech Holdings, both in 2015.
In the case of On The Beach Group, he contacted other fund managers at competitor firms in September 2015 and attempted to influence them to cap their orders at the same price limit as his own orders.
This was an attempt to get investors to use their collective power and thereby undermine the proper price formation process of the IPO, which risked causing harm to other market participants, said the FCA.
It followed a similar attempt in July 2015 in relation to a placing by Market Tech Holdings.
The FCA said Stephany failed to observe proper standards of market conduct and 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.”
The FCA fine is the second lowest band of severity out of five bands and amounts to 10% of Stephany’s relevant income at the time, which was £322,616. The FCA acknowledged that Stephany had not intended to breach rules and had not tried to hide his actions.
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