FCA investigates four asset management firms for alleged IPO law breach

The UK financial services regulator has issued a ‘statement of objections’ to four asset management firms: Artemis Investment Management, Hargreave Hale, Newton Investment Management and River & Mercantile Asset Management, claiming that it believes the four firms may have broken competition law.

The FCA alleges that the four firms shared information by disclosing the price they intended to pay, or accepting such information, or both, in relation to one or more of two Initial Public Offerings (IPOs) and one placing, shortly before the share prices were set.

This is the first case the FCA is bringing using its recently introduced competition enforcement powers.

The FCA said in a statement released this morning that it believes sharing “generally occurred on a bilateral basis and allowed firms to know the other’s plans during the IPO or placing process when they should have been competing for shares”.

The regulator said that these are “provisional findings and may not necessarily lead to an infringement decision”. A statement of objections gives firms notice that the FCA thinks that they have infringed competition law and the opportunity to respond by making written and oral representations.

Careful consideration

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

The FCA’s main allegations against the four firms are that separately:

  • in 2015, Newton Investment Management Limited (‘Newton’) and Hargreave Hale Ltd and River & Mercantile Asset Management LLP disclosed and/or accepted information about the price they intended to pay for shares in relation to one IPO and a placing;
  • in 2014 Artemis Investment Management LLP and Newton shared information about the price they intended or were willing to pay for shares in relation to another IPO.

Full details of the statement of objections will not be made public, however any final decision taken will be published providing more detail about the case, the regulator said.

A statement of objections is a document that sets out why and how the FCA thinks that the relevant firms have infringed applicable competition law, in particular: the facts on which the FCA relies, the objections it raises, the action it proposes, and its reasons for its proposed action.

Final decision

Following the issue of a statement of objections, parties have the opportunity to make written and oral representations on the matters set out in it. Any such representations will be considered by the FCA before any final decision is taken. The final decision is taken by a 3-member Competition Decision Committee group, which is separate from the case investigation team and is not involved in the decision to issue the statement of objections.

The statement of objections is addressed to the following parties, which the FCA provisionally considers were directly involved in the alleged infringement and/or are liable as parent companies of the undertakings directly involved:

  • Artemis Investment Management LLP;
  • Hargreave Hale Ltd;
  • Newton Investment Management Limited (subsidiary), and The Bank of New York Mellon Corporation (ultimate parent); and
  • River and Mercantile Asset Management LLP (subsidiary), and River and Mercantile Group PLC (ultimate parent).

Regulated firms should bring their own actual and possible significant contraventions of competition law to the FCA’s attention, as they are obliged to do under Principle 11 of the Principles for Businesses and rules in the FCA’s Supervision manual.

The FCA concluded that any person who is in a position materially to assist the FCA’s assessment of the case may request a non-confidential version of the statement of objections by contacting the FCA no later than 12 January 2018, explaining how they can assist.

Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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