FCA Accuses Four Asset Managers of Breaking Law

Statement of objections initiates regulator’s first enforcement case.

UK regulator the Financial Conduct Authority (FCA) said it believes four asset management firms may have broken competition law by colluding on IPO price information. It is the first case the FCA is bringing using its competition enforcement powers.

The FCA issued a statement of objections to Newton Investment Management, Artemis Investment Management, Hargreave Hale Ltd, and River & Mercantile Asset Management LLP. According to the FCA, the four firms allegedly shared information by disclosing the price they intended to pay in relation to one or more of two IPOs, and one placing, shortly before the share prices were set.

“The 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,” said the FCA in a release.

According to the allegations, Newton Investment Management, Hargreave Hale, and River & Mercantile Asset Management disclosed and/or accepted information about the price they intended to pay for shares in relation to one IPO, and a placing, both in 2015. And in 2014, Artemis Investment Management and Newton allegedly shared information about the price they intended, or were willing to pay, for shares in relation to another IPO.

“The FCA will carefully consider any representations from the firms before deciding whether the law has been broken,” said the FCA. “Any final decision taken will be published providing more detail about the case.

London-based Newton Investment Management, which is a subsidiary of BNY Mellon, has assets under management of £55 billion, while Artemis manages £27 billion. Hargreave Hale was acquired by Canaccord Genuity Wealth Management in September.

The FCA said the findings are provisional, and may not necessarily lead to an infringement decision. A statement of objections, such as the ones issued to the four firms, gives notice that the FCA believes they have infringed competition law, and allows the companies the opportunity to respond with written and oral representations, which will be considered before any final decision is taken. The final decision is made by a three-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.

In 2015, the FCA gained concurrent powers to enforce competition law under the Financial Services and Markets Act 2000.

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