The Financial Conduct Authority (FCA) has issued a statement of objections to Artemis Investment Management, Hargreave Hale, Newton Investment Management and River & Mercantile Asset Management in the first case the regulator is bringing using its competition enforcement powers, as it believes the firms may have broken competition law.
The FCA alleges that the four firms shared information by disclosing the price they intended to pay, accepting such information, or both, in relation to Initial Public Offerings (IPOs) and placings, shortly before share prices were set.
In first case of the FCA using its competition enforcement powers, the regulator said in a statement: "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."
BNY Mellon boutique Newton, Hargreave Hale and River & Mercantile are accused of disclosing and/or accepting information about the price they intended to pay for shares in relation to one IPO and a placing in 2015.
Meanwhile, Artemis is accused of sharing information about the price it intended or was willing to pay for shares in relation to a separate 2014 IPO.
The FCA said the provisional findings "may not necessarily lead to an infringement decision" and are intended to give the firms notice of the FCA's allegations that they "have infringed competition law".
All four firms will be given the opportunity to respond to the regulator, which will "carefully consider any representations from the firms before deciding whether the law has been broken".
The firms' objections will not be made public, however any final decision taken by the FCA will be published, providing more detail about the case.
Its final decision is taken 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 objection.
River & Mercantile highlighted the FCA's investigation in its annual results in September. It said it is co-operating with the regulator on the matter which would not affect any clients of the group, or the NAV of any fund or segregated mandate.
In the event of any financial impact, the directors do not expect the net outcome to be material to financial statements, it added.
Commenting on the allegations Newton said in statement that it "has been cooperating fully with the FCA and will continue to do so until this matter reaches its conclusion".
It said: "The FCA's investigation is focused on a very small number of Newton's UK equity-focused strategies which can invest in small and mid-cap UK equities.
"Specifically, it relates to activity surrounding two initial public offerings and a placement in 2014 and 2015.
"There has to date been no loss to any clients/investors as a result of the activity, and we do not anticipate any loss in the future.
"We take compliance matters seriously and are committed to ensuring that our business is managed with the highest commitment to legal and ethical standards."
Artemis said in a statement: "We note the FCA's provisional findings. We will continue to cooperate with the FCA as its investigation proceeds."
Canaccord Genuity Wealth Management, which owns Hargreave Hale, said: "The statement from the FCA relates to a competition law matter which names Hargreave Hale, amongst other firms. This matter relates to the Hargreave Hale fund management business prior to its acquisition by Canaccord Genuity Wealth Management and was disclosed to us during our due diligence process.
"Hargreave Hale has fully cooperated with the FCA and will be making further representations to the FCA for its review and consideration, with respect to the two transactions in question. We note that the findings are provisional and may not necessarily lead to an infringement decision."
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