The watchdog found that between 1 January and 19 June 2013, WHI failed to ensure it had the "proper systems and controls" in place to prevent market abuse being detected or occurring.

At the time the failings took place, WHI had around 9,000 private wealth clients with approximately £2.5 billion of assets under management.

The FCA said these clients may have bought and sold financial instruments, or may have been advised to do so by the firm, without the necessary protections in place. WHI also had 87 Corporate Broking clients. Due to the lack of proper systems and controls in place the firm could not protect against the risk of market abuse in respect of the information provided by these clients.

Mark Steward, director of enforcement and market oversight at the FCA, said: “We expect all firms to have the right controls in place to mitigate risks and protect their clients and the integrity of the markets.

“In this case, WHI’s failings were aggravated by the failure to implement adequately the skilled person’s recommendations. It is one thing to be given a chance; for the chance not to be taken up is especially culpable.”

WHI’s failings, which amounted to a breach of Principle 3, included:

• deficient controls to ensure inside information did not leak from the private to the public side of its business 

• inadequate personal account dealing rules for employees

• failures to maintain an effective written conflicts of interest policy 

• deficient compliance oversight 

The FCA considered these failings to be particularly serious because:

• the range of services that WHI performed during this time meant that WHI was exposed to a broad range of market abuse risks; and

• WHI received inside information on a regular basis. As such there was significant scope for an adverse impact on the market and on a large number of other market participants if that inside information was mishandled.

In addition to the breach of Principle 3, WHI also breached the Senior Management Arrangements Systems and Controls (SYSC) rules in the FCA Handbook concerning conflicts of interest.

The failings were identified by a Skilled Person appointed by the FCA in a report of August 2013. In July 2014, WHI commissioned a follow up report. This second report showed that there were some recommendations which had not been implemented adequately within the time set by the Skilled Person. 

WHI received a 20 per cent Stage 2 settlement discount, without which, the fine would have been £1.5 million, and the restriction would have been 90 days.