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FCA accuses fund groups of colluding on IPOs

Regulator alleges Artemis, Newton, River and Mercantile and Hargreave Hale shared the price they were willing to pay for shares.

FCA accuses fund groups of colluding on IPOs

City regulator the Financial Conduct Authority (FCA) has accused four fund groups of sharing information on the price they would pay for shares ahead of two initial public offerings (IPO) and a placing.

The FCA alleged that in 2015, Newton Investment Management, Hargreave Hale and River and Mercantile Asset Management shared information about the price they intended to pay for shares ahead of one IPO, or flotation, and a placing.

In a separate IPO in 2014, the regulator claimed Artemis and Newton similarly shared information on the price they were willing to pay.

The FCA said it believed the four fund groups could have broken competition law and has issued a 'statement of objections'.

This is the first case the regulator has brought under its competition enforcement powers.

The regulator said these were 'provisional findings' and that they would 'not necessarily lead to an infringement decision'.

'The FCA will carefully consider any representations from the firms before deciding whether the law has been broken,' it said.

In response, Artemis said: 'We note the FCA's provisional findings. We will continue to co-operate with the FCA as its investigation proceeds.'

A Newton spokesperson said: 'Newton is not in a position to comment on any actions with regard to the FCA’s ongoing investigation, except to note that Newton has been cooperating fully with the FCA and will continue to do so until this matter reaches its conclusion.

'The FCA’s investigation is focused on a very small number of Newton’s UK equity-focused strategies which can invest in small and mid-cap UK equities. Specifically, it relates to activity surrounding two initial public offerings and a placement in 2014 and 2015.

‘There has to date been no loss to any clients/investors as a result of the activity, and we do not anticipate any loss in the future.

‘We take compliance matters seriously and are committed to ensuring that our business is managed with the highest commitment to legal and ethical standards.’

Canaccord Genuity Wealth Management, which acquired Hargreave Hale this year stated that the company disclosed the matter during its due diligence process.

It said: 'Hargreave Hale has fully co-operated with the FCA and will be making further representations to the FCA for its review and consideration, with respect to the two transactions in question. We note that the findings are provisional and may not necessarily lead to an infringement decision.'

In a stock exchange announcement River & Mercantile said: 'The matter does not affect any clients of the group or the NAV of any fund or segregated mandate. The group has not been notified of the outcome of this investigation however, in the event of a financial impact, the directors do not expect the net outcome to be material to the financial statements.'


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