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FCA fines ex-Newton fund manager over conduct failure

FCA fines ex-Newton fund manager over conduct failure

The Financial Conduct Authority (FCA) has fined Paul Stephany, the former manager of £1 billion Newton UK Growth fund, £32,200 for his conduct in relation to an initial public offering (IPO). 

The former fund manager at Newton Investment Management 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.

In a statement, the company said: 'It is not our policy to comment on matters relating to former (or current) employees; however, Newton IM has been cooperating fully with the FCA and will continue to do so until it reaches its conclusion.'

On 21 September 2015, Stephany sent an email to himself, which he blind copied to 14 external fund managers at 11 competitor firms, that included the following statement regarding the listing of a company called On the Beach (OTB): 'I wanted to urge those considering or in for the OTB IPO to think about moving to a 260 million pre money valuation limit. I have done that first thing this morning with my 17 million order.'

The FCA found he acted without due skill, care and diligence by failing to give proper consideration to the risks of engaging in these communications, which risked undermining the integrity of the stock market.

In December 2017, Newton admitted to firing an unnamed fund manager following a regulatory probe into the rigging of share prices.

At the time, the FCA was investigating four fund firms (Newton, Artemis, Hargreave Hale, and River and Mercantile) over the possibility that they had broken competition rules. 

In February a year earlier, the then Citywire AAA-rated Stephany was replaced as the manager of the £1 billion Newton UK Equity fund. At the time, Newton's parent company BNY Mellon declined to comment on the reason behind Stephany stepping back, but confirmed he remained an employee at Newton.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: 'This matter underscores the importance of fund managers taking care to avoid undermining the proper price formation process in both IPOs and placings.

'These markets play a vital role in helping companies raise capital in the UK’s financial markets and when they are put at risk the FCA will take action.'

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