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Tuesday, 05 February 2019 10:15

FCA fines ex-Newton fund manager £32,000

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The Financial Conduct Authority has fined Paul Stephany, a former fund manager at Newton Investment Management, £32,200 for his conduct in relation to an Initial Public Offering.

Mr Stephany contacted other fund managers to ask them to support him in trying to manipulate IPO share prices.

He was found to have acted without due skill, care and diligence.

The watchdog said that on two separate occasions, Mr Stephany submitted orders as part of a ‘book build’ for shares that were due to be quoted on public stock exchanges.

Prior to the order books for the new shares closing, Mr Stephany then 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, he 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.

A wider investigation is under way into the competition issues caused by the share price manipulation.

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 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. 

It is understood the FCA says it will make an announcement regarding the outcome of the Competition Act 1998 investigation in due course.

 

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