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FCA fines Hargreave Hale and River & Mercantile for competition breach

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FCA fines Hargreave Hale and River & Mercantile for competition breach

The Financial Conduct Authority (FCA) has fined Hargreave Hale and River and Mercantile Asset Management after they were found to have broken competition rules.

A third firm, Newton Investment Management, was also found to be in breach. However, it was not fined, because it was given immunity under the competition leniency programme, the FCA said.  

Hargreave Hale was fined £306,300, and River and Mercantile was fined £108,600.

The City watchdog found that the three companies shared strategic information during one initial public offering (IPO) and one placing shortly before the share prices were set.

The probe into the companies was first revealed in November 2017.

The FCA had said the main allegations dated back to 2014, when Artemis and Newton shared information about the price they intended to pay for shares in relation to an IPO.

Then, in 2015, the FCA said Newton, Hargreave Hale, and River and Mercantile disclosed or accepted information about the price they intended to pay for shares in relation to another IPO and a placing. 

Earlier this month, the FCA fined former Newton manager Paul Stephany £32,200 for his conduct in relation to an IPO. 

The former manager of the £1 billion Newton UK Growth fund on two separate occasions submitted orders as part of a book build for shares that were to be quoted on public exchanges, the regulator said.

Following the news about Stephany's fine, Wealth Manager sister title Funds Insider revealed the names of the fund managers who sparked the FCA's probe. 

The regulator said there were no grounds for action against Artemis and Newton for activities that took place between April and May 2014 in relation to an IPO.

Christopher Woolard, executive director of strategy and competition, said: ‘This is our first case using our competition law powers and demonstrates our commitment to taking enforcement action to protect competition.

He added: 'Asset management firms must take care to avoid undermining how prices are properly set for shares in both IPOs and placings. Failure to do so risks them acting illegally.

'The FCA will act when markets that play a vital role in helping companies raise capital in the UK’s financial markets are put at risk. We can also take regulatory action against an individual and did so here with respect to some of the same facts.’

Canaccord Genuity Wealth Management, which acquired Hargreave Hale in 2017, said that it is confident Hargreave Hale employees conducted themselves professionally and in the best interests of clients. 

It added that Hargreave Hale's penalty reflects the higher turnover it had in the relevant market. 

A spokesperson said: 'Based on our initial review of the FCA’s decision in connection with its Competition Act investigation, we believe that the FCA has made a number of legal and factual errors in concluding that Hargreave Hale infringed competition law and we are exploring our options with our legal advisers.

'In particular, Hargreave Hale was simply a recipient of information that was provided on an unsolicited basis by another fund manager and did not alter its own bidding behaviour as a result.

'We have co-operated fully with the FCA throughout its investigation and have provided comprehensive evidence and arguments to support our view that no infringement involving Hargreave Hale occurred.'

River and Mercantile added that the fine is inline with the figure it disclosed back in 2018 and that the firm is 'pleased the FCA has reached a conclusion'. 

Mark Thomas, managing director of wholesale distribution, said: 'I would like to assure you that we take these matters very seriously.

'We have worked hard to ensure that enhancements of our procedures and processes demonstrate an ongoing commitment to continuous improvement and believe that our investment in these key parts of our business, in the face of a changing regulatory and operational environment, is clear evidence of our determination to uphold the highest standards of conduct across the firm.' 

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