Top stockbroking firm fined over market abuse breaches
LONG-established stockbroker and wealth manager WH Ireland has been fined £1.2m and banned from taking on any new corporate broking clients for 72 days after a probe by the City watchdog.
The Financial Conduct Authority (FCA) said the firm, which has a large Manchester office on John Dalton Street – which was its corporate headquarters for many years – had breached a number of serious compliance-related rules during 2013.
An investigation by the FCA found that between January 1 and June 19, Ireland failed to ensure it had the proper systems and controls in place to prevent market abuse being detected or occurring.
The firm’s failings included: deficient controls to ensure inside information did not leak from the private to the public side of its business or in ensuring disclosure to external parties was conducted in a controlled manner with proper safeguards in place; inadequate personal account dealing rules for employees; failures to maintain an effective written conflicts of interest policy and inadequate recording of the kinds of service or activity carried out by WHI in which a conflict of interest had arisen or may arise.
The FCA said that at the time the failings took place, WHI had around 9,000 private wealth clients with approximately £2.5bn of assets under management.
It added: “These clients may have bought and sold financial instruments or may have been advised to do so by the firm without the necessary protections in place. WHI also had 87 Corporate Broking clients. Due to the lack of proper systems and controls in place the firm could not protect against the risk of market abuse in respect of the information provided by these clients.”
A year after the failings had been identified, the FCA found that some recommendations had not been implemented adequately, despite the regulator having been “communicating widely with all firms about their responsibilities for countering the risks of market abuse by having effective controls”.
Mark Steward, director of enforcement and market oversight at the FCA, added: “We expect all firms to have the right controls in place to mitigate risks and protect their clients and the integrity of the markets.
“In this case, WHI’s failings were aggravated by the failure to implement adequately the skilled person’s recommendations. It is one thing to be given a chance; for the chance not to be taken up is especially culpable.”
In a statement, WH Ireland said it had taken the issue “very seriously” and had invested in new systems and a new senior management team.
Chief executive Richard Killingbeck said: “As the FCA has noted we have made, and continue to make, wholesale changes to our management team and our systems and controls. We regret that we fell short of the FCA’s expectations but since the beginning of my tenure in early 2013, significant changes have been made at the company and new specific oversight functions have been created.
“This cultural change will continue to lead to the improvement in the regulatory oversight across the company. Looking forward, we, the management team can now focus our efforts on developing both our wealth management and corporate broking divisions, and continue to provide a high level of service for clients, alongside driving revenues and creating long term value for our shareholders. We are pleased that this matter has been fully resolved with the FCA.”
Separately Ireland said it had raised £1.07m in a placing of 1,193,000 shares at 90p per share. The funds raised from the placing will be used for corporate purposes, the firm stated.