Cenkos pays FCA £0.5m fine in relation Quindell representations
The Financial Conduct Authority (FCA) fined mid-cap stockbroker Cenkos this morning for making incorrect representations over insurance company Quindell's attempted admission to the stock exchange.
Cenkos paid £530,500 in early settlement of the fine, which would have otherwise been £757,800.
The size of the fine was in line with expectations, and Cenkos' share price increased by nearly five per cent in morning trading.
In 2014 Cenkos said it had carried out the necessary due diligence on the then Aim-quoted Quindell – now called Watchstone – to be admitted to the main London Stock Exchange. The listing was abandoned as the broker could not convinced the regulator that it met the relevant criteria.
"Cenkos did not carry out its sponsor role with the level of diligence and professional care that the Authority would expect. Cenkos failed to identify and manage properly the key risks relating to whether the client would be able to demonstrate its eligibility for a premium listing," said Mark Stewart of the FCA.
In addition, the FCA said that Cenkos – itself an Aim-quoted company – was unable to provide information to the regulator that was "accurate and complete".
"Further, it failed also to properly understand and address the serious concerns raised by the FCA during the transaction regarding the client’s ability to demonstrate its eligibility, and it failed to consider the potential impact of a negative research piece published by Gotham City Research LLC on 22 April 2014 regarding the client on the transaction, the timetable, and any risk of investor detriment," said Stewart.
"The company fully co-operated with the investigation and has entered into a full and final settlement with the FCA," said Cenkos in its response to the FCA decision.
"Since 2014, the company developed and implemented an extensive remediation programme to enhance and improve its systems and controls in relation to its sponsor services, including steps taken in consultation with the UKLA.
"The FCA has acknowledged the extensive remediation programme which the Company has undertaken in order to enhance and improve its systems and controls in relation to its sponsor services."