Newton, Artemis Accused of Sharing IPO Data by U.K. FCA

Updated on
  • Hargreave Hale and River & Mercantile also accused in case
  • Regulator says companies inappropriately shared IPO pricing

Four asset management firms, including Newton Investment Management Ltd., were accused of sharing pricing information ahead of initial public offerings as the U.K. markets watchdog flexed its competition powers for the first time.

The U.K. Financial Conduct Authority issued a so-called statement of objections against Newton, Artemis Investment Management LLP, Hargreave Hale Ltd. and River & Mercantile Asset Management LLP, the watchdog said Wednesday. The complaint alerts firms that the FCA thinks they broke competition law and gives them the opportunity to respond before a final decision.

The FCA alleges the group shared information about the price they intended to pay in relation to possibly two IPOs and one placing before share prices were set. That allowed firms to know each other’s plans during the process when they should have been competing for shares. The FCA claims that in 2015 Newton, Hargreave and River & Mercantile shared information in relation to one IPO and a placing, while in 2014 Artemis and Newton discussed pricing in a second IPO.

Possible Penalties

The regulator said the findings won’t necessarily lead to sanctions and the statement of objections are private. A three-person panel called the Competition Decisions Committee will make the final decision on any penalties, but firms can appeal the ruling to the Competition Appeal Tribunal.

While the FCA can levy financial penalties as high as 10 percent of global revenue, antitrust regulators in the U.K. and European Union rarely issue fines that large. The FCA was given competition powers for the first time in 2015.

All four companies said they would continue to cooperate with the FCA.

"The FCA took on competition powers with great fanfare, so it is perhaps surprising that it has taken this long to launch their first enforcement case," said Celyn Armstrong, a London lawyer at Dentons, who previously worked at the regulator. The FCA “has chosen a case where there was no direct effect on retail customers, in an area where market practice has been varied. Some might argue that the FCA should have issued guidance on buy side obligations in IPOs" beforehand.

Owned by Bank of New York Mellon Corp., London-based Newton oversees 55 billion pounds ($74 billion) in assets. Its former Chief Executive Officer Helena Morrissey left the firm earlier year to join Legal & General Investment Management. Privately owned Artemis is based in London and oversees 27.2 billion pounds in assets, while River & Mercantile oversees 31 billion pounds.

Hargreave was bought by Canaccord Genuity Group Inc. earlier in the year for 52 million pounds to expand its wealth management operations in the U.K. As of July, Hargreave managed about 8 billion pounds for 14,000 clients.

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