Fund manager fined for influencing IPO price

A former fund manager has been fined over £32,000 by the City watchdog for misconduct during an initial public offering and placing.

The Financial Conduct Authority said it had fined Paul Stephany £32,200 for twice failing to “observe proper standards of market conduct”.

In 2015, Stephany was working as a portfolio fund manager at Newton Investment Management, part of BNY Mellon. Stephany had submitted orders as part of a book build for shares in travel firm On The Beach, which was due to list on the London Stock Exchange. But the FCA found that before the book closed, he contacted fund managers at rival firms and “attempted to influence them to cap their orders at the same price limit as his own orders”.

In doing so, the FCA said that Stephany risked undermining the integrity of the market and the book build by trying to use their collective power. It had also followed a similar attempt by Stephany earlier in 2015 in relation to a placing by Market Tech.

He was therefore found to have acted “without due skill, care and diligence by failing to give proper consideration to the risks of engaging in these communications”. He now has two weeks to pay the fine.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “This matter underscores the importance of fund managers taking care to avoid undermining the proper price formation process in both IPOs and placings.”

Stephany was fired by Newton in 2017 for gross misconduct and now works as a consultant. He said he fully respected the regulator’s decision, “which acknowledges that my honesty and integrity as a fund manager are not in doubt and that no market user lost out financially due to my actions”.