Aviva escaped a fine because the mistake was unintentional and it put in place a scheme to compensate any investors who lost out.
The announcement on 8 March 2018 related to Aviva’s preliminary year-end results.
The announcement by Aviva created the potential impression that the company intended to cancel at par value certain preference shares.
The shares had been described at the time of issue in the early 1990s as “irredeemable.”
At the time, the preference shares were trading above their par value and so the statement caused concern that holders would incur losses on cancellation and some sold out as a result.
At the close of market on that day the market price for Aviva’s preference shares fell between 20% and 26% as holders took action to sell at the above par market price.
Retail investors made up a significant proportion of the preference shareholders affected, the FCA said.
Aviva clarified the statement and provided a payment scheme for those shareholders affected. The FCA found Aviva’s breach to be serious but not intentional.
The impression given by the announcement was not accurate, said the watchdog.
Aviva clarified its intentions in a further regulatory announcement on 23 March 2018 which expressly stated Aviva had decided to take no action to cancel the preference shares.
A week later, Aviva also established a payment scheme for preference shareholders who sold their shares in the period between the announcement and 22 March 2018 at a share price that was lower than the price to which the preference shares returned following 23 March 2018.
This scheme was intended to put those shareholders in the same financial position they would have been in had they sold their preference shares during this period.
The FCA found that Aviva “failed to consider” properly its obligations under the rules to take reasonable care to ensure the announcement was not misleading.
Mark Steward, the FCA’s executive director of enforcement and market Oversight, said: “This was a significant oversight by Aviva that confused the market for preference shares.
“Firms must ensure that announcements to the market are clear and not misleading. But for Aviva’s prompt clarification and the payment scheme, this case could have led to a financial penalty.”