Regulation  

FCA fines sponsor £230k for listing rules breach

FCA fines sponsor £230k for listing rules breach

The Financial Conduct Authority has used its power to fine sponsors for the first time, by demanding £231,000 from Execution Noble and Company Limited for breaching the listing rules in relation to sponsors.

In a final notice published today (6 January), the regulator said ENCL failed to tell the UK Listing Authority that two thirds of its sponsor team had left between June and November 2013, yet it continued to market itself as a competent sponsor throughout this period.

Following reports in November 2013 that an individual responsible for leading and executing sponsor services had joined another firm, the UKLA sought clarification on what the staffing situation was.

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The UKLA was then informed of the other departures, including one individual who had left almost five months earlier.

The FCA said the delay undermined the UKLA’s ability to assess ENCL’s “ongoing competence” to act as a sponsor. Furthermore, it provided one sponsor service after the relevant individuals had left.

The regulator said that sponsors perform a “dual role” which involves providing “expert” advice and guidance to current and prospective premium listed companies and providing regulatory assurances to the FCA, designed to protect investors.

This is the first use of the FCA’s power to fine sponsors, which were introduced in 2013.

The watchdog described ENCL’s failure to be open and cooperative with the regulator as “particularly disappointing” in light of its close contact with the UKLA between September 2011 and June 2013 due to concerns over its low levels of sponsor activity.

Georgina Philippou, acting FCA director of enforcement and market oversight, said: “Sponsors perform a critical role in maintaining the integrity of the premium listed equity market by providing expert guidance on the listing rules and key regulatory assurances to the FCA.

“It is vital that the regulator, issuers and investors have confidence in sponsors; and we rely on them having an open and co-operative relationship with us. All sponsors should take note of the consequences if they fail to notify us of material information on time.”

donia.o’loughlin@ft.com