The UK’s financial watchdog has slapped two investment management groups with fines for breaking competition rules by sharing information ahead of an initial public offering (IPO).
The Financial Conduct Authority (FCA) fined Hargreave Hale £306,300 and River and Mercantile Asset Management (Raman) £108,600.
It said the firms had shared “strategic information”, including their intentions on pricing and volumes, during the IPO of travel retailer On The Beach and placing of real estate platform Market Tech.
A third fund, Newton Investment Management – a subsidiary of BNY Mellon – avoided a fine after receiving immunity under the FCA’s competition leniency programme, which offers protections to firms that report cartel activity or assist in investigations.
Earlier this month, the FCA fined former Newton fund manager Paul Stephany for misconduct related to On The Beach’s listing.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “Asset management firms must take care to avoid undermining how prices are properly set for shares in both IPOs and placings. Failure to do so risks them acting illegally.”
It is the first time the FCA has issued a formal decision based on its competition enforcement powers, which it was granted in 2015. Woolard said the ruling demonstrated the FCA’s “commitment to taking enforcement action to protect competition”.
“The FCA will act when markets that play a vital role in helping companies raise capital in the UK’s financial markets are put at risk,” he said. “We can also take regulatory action against an individual and did so here with respect to some of the same facts.”
James Barham, chief executive at Raman, said: “We are pleased that the FCA has reached a conclusion in what has been a long and complex investigation. We have always believed passionately in maintaining the highest standards in everything we do and, while we are disappointed the FCA has come to this decision, we are confident the ongoing investment we have made in our procedures and processes clearly demonstrates our commitment to uphold these standards.”
Hargreave Hale said: “Based on our initial review of the FCA’s decision in connection with its Competition Act investigation, we believe that the FCA has made a number of legal and factual errors in concluding that Hargreave Hale infringed competition law and we are exploring our options with our legal advisers.”
“Hargreave Hale was simply a recipient of information that was provided on an unsolicited basis by another fund manager and did not alter its own bidding behaviour as a result,” it said, claiming to have provided “comprehensive evidence and arguments” that it had not infringed rules.
It added: “We note that none of the individuals representing our organisation has been investigated by the FCA and we remain confident that Hargreave Hale employees conducted themselves professionally and in the best interests of clients.”
In a separate decision, the FCA ruled there were “no grounds for action” in relation to interactions between Artemis Investment Management and Newton that took place between April and May 2014 in connection to an IPO.