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Sponsor BDO censured over listing rule failures

The FSA has censured accountancy group BDO for failing to liaise with the UK Listing Authority over a proposed merger deal.

This is the first time the FSA has publicly censured a sponsor in relation to the listing rules. In May 2009, BDO was approached by investment group Shore Capital to provide advice as a sponsor on its proposed merger with Puma Brandenburg, a company investing in German property.

Shore Capital’s shares were listed on the Official List and traded on the London Stock Exchange. BDO knew the significant size of Puma meant the deal was likely to be classed as a reverse takeover.

The listing rules state it will often be appropriate to suspend a listed company’s shares when a reverse takeover is ann-ounced unless the UKLA is satisfied there is sufficient information already in the market about the deal.

Despite these requirements, BDO agreed with Shore Capital it would delay contacting the UKLA until after the announcement and attempted to avoid classifying the transaction as a reverse takeover.

UKLA head of department Marc Teasdale says: “Sponsors are entrusted to provide sound and expert guidance to issuers on their obligations and are relied upon to be open with the UKLA. BDO failed in its responsibilities as a sponsor on this transaction and we are sending a clear message with this public censure about the importance we attach to the sponsor role.”

BDO has since made changes to its operations to ensure compliance with the sponsor rules in future. Head of advisory services Gervase MacGregor says: “BDO takes its regulatory responsibilities extremely seriously and I am confident these changes will ensure all future corporate finance work reaches BDO’s high standards without exception.”

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