Former fund manager Paul Stephany has been fined by the UK’s financial watchdog for misconduct related to On the Beach’s initial public offering (IPO) in 2015.
The Financial Conduct Authority (FCA) has fined Stephany, a former employee of Newton Investment Management, £32,200 after it was found that he had contacted rival fund managers to influence them to cap their orders at the same price limit as his.
In September 2015 Stephany was the lead fund manager at Newton in respect of the package holiday provider’s listing and contacted 11 external fund managers ahead of the IPO, according to FCA documents, in an attempt to drive down the price of the shares.
Stephany was also found to have attempted a similar process in relation to a placing of e-commerce business Market Tech’s shares in July 2015.
“Stephany failed to observe proper standards of market conduct…[his] actions were an attempt to get the external fund managers at competitor firms to use their collective power and thereby undermine the proper price formation process in an IPO and a placing for the benefit of the funds that he managed,” a final notice published by the FCA said.
FCA executive director of enforcement and market oversight Mark Steward 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.”
A separate FCA probe is investigating whether Artemis Investment Management, Hargreave Hale, River & Mercantile Asset Management and Newton broke competition law in relation to the IPOs.