The FCA has fined ex-fund manager Paul Stephany £32,200 over conduct around an Initial Public Offering.
The FCA says Stephany, who was a fund manager at Newton Investment Management, on two occasions attempted to “influence [other fund managers] to cap their orders at the same price limit as his own orders” when undertaking a book build for shares to be quoted on public exchanges.
In a statement the FCA says Stephany’s actions could have damaged the market: “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.”
FCA executive director of enforcement and market oversight Mark Steward says: “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 initial public offering in question was for On The Beach Group. The FCA found that in 2015 Stephany contacted fund managers at rival firms in an attempt to encourage them to cap their orders at the same amount as his own.
Stephany’s official role involved preparing an internal research note on the OTB IPO for colleagues at Newton. He was meant to communicate with the person running the book on the IPO to get updates on progress and coordinate orders for the four private equity funds he managed, plus funds of colleagues at Newton.
The FCA’s final notice to Stephany dated 4 February 2019 states: “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.”
It notes Stephany behaved in a similar way in relation to a placing by Market Tech Holdings Limited, also in 2015.