FCA fines ex-Newton fund manager for IPO misconduct

Fund manager “risked undermining the integrity of the market.”

Funds and Investment Trusts February 5, 2019 by Tom Bailey

Former Newton Investment Management fund manager Paul Stephany has been fined £32,000 by the Financial Conduct Authority (FCA) for attempting to cap the price of shares in an initial public offering.

According to the FCA after placing orders for shares of a company scheduled to be publically listed, Stephany contacted competitor fund managers and urged them to cap their orders at the same price limit. This, the regulator says, was a “failure to observe proper standards of the market.”

The FCA initially launched an investigation into Stephany and the other fund management firms he is alleged to have contacted in November 2017. Stephany has previously claimed that his actions were “normal behaviour”, arguing that “investors often discuss their views with each other”.

The regulator, though, viewed Stephany’s action as an attempt to use the collective power of fund managers and “risked undermining the integrity of the market.”

Mark Steward, executive director of enforcement and market oversight at the FCA, 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.”

Stephany managed the Newton UK Opportunities fund from February 2013 to February 2016, and also managed the Newton UK Equity fund from September 2014 to February 2016.

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