Several institutional asset managers may have broken competition law, according to the UK’s financial regulator.

The Financial Conduct Authority (FCA) believes Artemis Investment Management, Hargreave Hale, Newton Investment Management, and River & Mercantile Asset Management may have broken competition law in relation to Initial Public Offerings (IPOs) and a placing.

In a “statement of objections” released this morning, the regulator alleged that the 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 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.

It has issued a “statement of objections” to the four asset managers. This gives the firms notice that the FCA thinks they have infringed competition law and gives them the opportunity to respond by making written and oral representations.

The statement of objections has not been made public.

It is the first case the FCA has brought using its competition enforcement powers.

Its main allegations against the firms are that separately:

  • in 2015, Newton and 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;
  • in 2014 Artemis and Newton shared information about the price they intended or were willing to pay for shares in relation to another IPO.

Newton Investment Management was ranked 45th in IPE’s 2017 ranking of asset managers of European institutional assets, with €43.7bn under management.

Artemis’ website said it managed €31bn of assets as at 31 October.

In Newton and River and Mercantile’s cases, the statement of objections is also addressed to the their ultimate parent companies. 

A spokeswoman for Newton said: “Newton is not in a position to comment on any actions with regard to the FCA’s ongoing investigation, except to note that Newton has been cooperating fully with the FCA and will continue to do so until this matter reaches its conclusion.

“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.”

A spokesman for Artemis said: “We note the FCA’s provisional findings. We will continue to cooperate with the FCA as its investigation proceeds.”

In a statement, Hargreave Hale’s parent company Canaccord Genuity Wealth Management 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.”

In a notice to the stock exchange in London, River & Mercantile Group said it was “cooperating fully with the FCA’s ongoing investigation in relation to the matter”.

The group added: “The statement of objections is a statement of the FCA’s provisional findings only and all parties will now have the opportunity to respond to the statement before the FCA decides if there has been an infringement. The group will review the [statement] and respond in due course.”

In its preliminary results statement, the group said the FCA’s allegations did not affect any clients, or the net asset value of funds or segregated mandates.

This article has been updated to include statements from affected asset managers.

Topics