On August 9, 2016 the Financial Conduct Authority (FCA) published a final notice imposing a fine of £530,500 on Cenkos Securities Plc for failures in its sponsor services business under Listing Rule 8.
The FCA found that Cenkos failed to have appropriate systems and controls in place across its sponsor services business in breach of LR 8.6.6R, failed to act in its sponsor role with the expected level of diligence and professional care in breach of LR 8.3.3R, and failed to take reasonable steps to ensure any communication or information it provided to the FCA was, to the best of its knowledge and belief, accurate and complete in all material respects, in breach of LR 8.3.1AR.
In 2014, Cenkos represented to the FCA that one of its clients was eligible for a Premium Listing when it had not carried out the requisite due diligence to ensure that this was correct. From March to June 2014 Cenkos corresponded with the UK Listing Authority (UKLA), submitting letters confirming the client’s eligibility for a Premium Listing, analysis of its acquisitions during the required three year track record period, and drafts of the client’s prospectus.
Despite submitting several drafts of the prospectus and eligibility letters to the UKLA, Cenkos failed to establish how its client met the eligibility criteria for a Premium Listing. Ultimately, the transaction in question had to be abandoned, as Cenkos was unable to satisfy the FCA of the client’s eligibility.
Cenkos agreed to settle at an early stage of the FCA’s investigation and therefore qualified for a 30 per cent discount. Were it not for this discount, the FCA would have imposed a financial penalty of £757,800 on Cenkos.
(FCA, Final Notice: Cenkos Securities Plc, 09.08.16)