British financial regulator FCA has fined broker and wealth manager WH Ireland (WHI) £1.2m for failing to ensure it had the proper systems and controls in place to prevent market abuse.
Also, the firm has been banned for 72 days from taking on new clients in its corporate broking division.
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The breach occurred between 1 January and 19 June 2013, when WHI had around 9,000 clients and £2.5bn of assets under management and 87 corporate broking clients.
According to the FCA, WH Ireland had deficient controls to ensure inside information did not leak from the private to the public side of its business or in ensuring disclosure to external parties was conducted in a controlled manner with proper safeguards in place.
The regulator found that WH Ireland had inadequate personal account dealing rules for employees and failed to maintain an effective written conflicts of interest policy and deficient compliance oversight.
The watchdog said WHI did not have formal risk framework for market abuse and inadequate post-trade surveillance systems.
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By GlobalDataThe FCA highlighted that private clients may have bought and sold financial instruments during that period without necessary protections in place.
WH Ireland also received inside information on a regular basis and there was ‘significant scope’ for an adverse impact upon a large number of market participants if inside information was mishandled, FCA said.
WHI also breached the senior management arrangements systems and controls (SYSC) rules concerning conflicts of interest.
FCA in a statement said that WHI received a 20% ‘settlement discount and it would have otherwise had a £1.5mn fine and a 90 day ban.
FCA director of enforcement and market oversight Mark Steward said: "In this case, WHI’s failings were aggravated by the failure to implement adequately the skilled person’s recommendations. It is one thing to be given a chance; for the chance not to be taken up is especially culpable."
