The Financial Conduct Authority (FCA) said that WH IRELAND had failed to ensure it had the proper systems and controls in place to prevent market abuse being detected or occurring.
Specifically, the watchdog said that controls to stop inside information leaking from one part of the stockbroker’s business to another were deficient.
WH IRELAND conducts corporate broking business, as well as stock trading and advisory services.
The breach, of FCA Principle 3, occurred between January 1 and June 19 2013. At the time, WH IRELAND had 87 corporate broking clients, and had 9,000 private clients in its wealth management business with some £2.5bn of assets under management.
The FCA highlighted that private clients may have bought and sold financial instruments during that period without necessary protections in place.
It said that WH IRELAND 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.
The FCA also highlighted inadequate personal account dealing rules for WH IRELAND employees; there were failings in the record keeping of conflicts of interest; and compliance oversight was deficient.
Furthermore, the FCA also noted that the failings were identified in a report in August 2013, but, nearly a year later in July 2014 some of the FCA recommendations had not been implemented adequately.
“It is one thing to be given a chance; for the chance not to be taken up is especially culpable,” said Mark Steward, FCA director of enforcement and market oversight.
In a stock market statement, WH IRELAND chief executive Richard Killingbeck said: “We regret that we fell short of the FCA's expectations but since the beginning of my tenure in early 2013, significant changes have been made at the company and new specific oversight functions have been created.”
“This cultural change will continue to lead to the improvement in the regulatory oversight across the company.”
WH IRELAND warned investors on December 18 that it faced a substantial fine, and that it was negotiating a settlement with the regulator; today’s FCA statement confirms the firm received a 20% ‘settlement discount and it would have otherwise had a £1.5mln fine and a 90 day ban.
The stockbroker’s AIM-quoted shares were this morning up 2.5p, 3%, trading at 87p each (prior to December’s warning the shares changed hands for around 100p).