On February 22, 2016 the FCA found that W H Ireland Ltd had failed to adequately install systems and controls for the prevention of market abuse or detection. The FCA fined WHI £1.2 million and imposed a restriction preventing WHI for 72 days from taking on new clients in its corporate broking division. The restriction was imposed because WHI had failed to address issues identified in a FCA appointed Skilled Person report dated August 2013. The FCA found that WHI had failed to take precautions against market abuse during the period between January 1 and June 19, 2013. During this period WHI had approximately £2.5 billion of assets under management, around 9,000 private wealth clients and 87 corporate broking clients. WHI’s failings were deemed to be in breach of Principle 3 of the FCA’s Handbook as WHI had failed to take reasonable care to organise and control its affairs responsibly and failed to maintain adequate risk management systems. Some of the failings included inadequate controls to prevent inside private information from leaking into the public component of the firm, insufficient rules for employees on dealing with personal accounts and inadequate conflicts of interest policies. The range of services provided by WHI meant that it was exposed to the possibility of market abuse risks and therefore the FCA considered WHI’s failings to be extremely serious. WHI’s exposure was compounded as it was in regular receipt of client inside information which, if mishandled, would have had an adverse impact on the market, potentially affecting a large number of market participants. WHI benefited from a 20% Stage 2 settlement discount which reduced the fine and restriction period from £1.5 million and 90 days respectively.
The FCA’s Final Notice is available at: http://www.fca.org.uk/your-fca/documents/final-notices/2016/wh-ireland.