Financial Conduct Authority fines WH Ireland £1.2m after firm failed to address market abuse issues
The City watchdog has fined WH Ireland £1.2m and banned it from taking on new clients in its corporate broking division over the next 72 days over market abuse failings.
The FCA found that for six months in 2013, the business did not have proper controls in place to prevent market abuse being detected or occurring.
Specific breaches included having 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; and having inadequate personal account dealing rules for employees.
It also failed to maintain an effective written conflicts of interest policy and suffered from "deficient compliance oversight" including the absence of formal risk management framework for market abuse and inadequate post trade surveillance systems.
The FCA said these failings were particularly serious because of the range of services that WHI performed during this time and the fact that WHI received inside information on a regular basis.
"As such there was significant scope for an adverse impact on the market and on a large number of other market participants if that inside information was mishandled," the watchdog said.
On top of this, WHI also breached rules concerning conflicts of interest.
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".
At the time the failings took place, WHI had around 9,000 private wealth clients with approximately £2.5 billion of assets under management, and 87 corporate broking clients, which the FCA says may have been advised "without the necessary protections in place".
Mark Steward, director of enforcement and market oversight at the FCA, said: “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.”
WHI received a 20 per cent settlement discount, without which, the fine would have been £1.5m, and the restriction would have been 90 days.