Adviser did not check properly whether Quindell was eligible for premium listing, regulator said
FCA has fined former Quindell adviser Cenkos Securities £530,500 for advising Quindell in early 2014 that it was eligible for a premium listing on the London Stock Exchange (LSE) without carrying out the necessary due diligence to ensure this was correct.
The plans to move insurance outsourcer Quindell to the LSE’s main board from the Alternative Investment Market were abandoned because Cenkos “was unable to satisfy the FCA that its client was eligible for a premium listing at that time”, the regulator said this morning.
The regulator did not name Quindell in its statement because the focus of its investigation was Cenkos’s failings as a sponsor of companies wanting to access the main board of the stock exchange. It made no criticism or complaint about Quindell.
It emerged last week that Cenkos was facing a fine over its 2014 advice to Quindell, now known as Watchstone Group.
Cenkos was the nominated adviser and house broker for Quindell up until August 2015, when it was replaced by Peel Hunt. Cenkos offers a sponsor function that helps companies access the main board of the London Stock Exchange.
If Cenkos had not agreed to settle at an early stage, it would have been fined £757,800.
The FCA said Cenkos ”failed to have appropriate systems and controls in place across its sponsor services business, and, on a particular transaction, failed to act in its sponsor role with the level of diligence and professional care that the FCA expects.”
FCA director of enforcement and market oversight Mark Steward said: “Sponsor firms have key gatekeeper functions to ensure a candidate for listing is eligible and so they must carry out appropriate due diligence to the requisite standards.
“The FCA will hold sponsor firms strictly accountable whenever these standards are not met given failure places both market integrity and the well-being of the investing public at risk.”
Cenkos said in a stock exchange announcement that since 2014 it has implemented an “extensive remediation programme” to improve systems and controls related to sponsor services.
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