Telephone 020 3813 2890 for a free no obligation chat about your regulatory requirements with one of our compliance consultants.

© Compound Growth Limited 2012 - 2020 | Terms of Use  Privacy Policy

Registered in England and Wales as limited company number 07626537 - Registered Office 120 Pall Mall, London, SW1Y 5EA

We use cookies, if you consent to this use, please continue to browse our site.

Here to help with Regulation and Compliance

Compound Growth

Individual Fined £45K for Failing to Notify of Personal Trades

Individual Fined £45,000 for Failing to Notify of Personal Trading

6th January 2020

At the tail-end of December, the FCA took the first enforcement action against an individual for a breach of Article (19) under the Market Abuse Regulation (MAR).

Mr Kevin Gorman, a former Managing Director of Braemar Shipping Services Plc (Braemar) was fined £45,000 for failing to notify of personal trades. Had he not been co-operative with the regulator during the investigation, the fine would have been £64,300.

Under the Market Abuse Regulation, a person discharging managerial responsibilities (PDMR), such as Mr Gorman, is required to notify the company and seek clearance in order to deal, in accordance with the company’s share dealing code. However, in spite of the fact that Mr Gorman had been sent the relevant notifications relating to his obligations as a PDMR under MAR and in respect of the requirements under the share dealing code, he failed to notify of personal share trades in the listed company as required. (Note that he was not a director of the listed company, but a managing director sitting on the company’s executive committee).

When asked why he had not notified the company as required, he claimed not to be aware of his obligations to do so under MAR or the share dealing code.

It should also be noted that the requirements of PDMRs under the Market Abuse Regulation to notify the FCA ad the issuer of every transaction conducted on their own account above a certain threshold within 3 business days also extends to those closely associated with them.

This includes notification about transactions in the issuer’s shares, debt instruments, derivatives or other linked financial instruments.

The Executive Director of Enforcement and Market Oversight at the Financial Conduct Authority, Mr Mark Steward, said “Transparency of trading by directors and other responsible officers is a key element of market integrity and helps to police the market against illegal insider trading.”

Furthermore, Mr Steward reminded directors of listed companies that like Mr Gorman they must also ensure they report their trading on time or risk undermining market integrity.

Failure to Notify of Personal Dealing

Whist Mr Gorman had not traded whilst in possession of any confidential inside information, the FCA informs that he had been found to have sold shares, on 3 occasions, worth a combined total of £71,235.28 between August 2016 and January 2017 – and on each of these occasions, he had done so without informing the FCA or the company (Braemar) within the required 3 business days.

In cases such as this, whilst the FCA primarily looks to set the fine based on any profits made by an individual, in this case, because Mr Gorman had not profited through the undisclosed trades, the FCA set the fine based upon his salary, at a rate of 10%.

Timely Reminder to Persons Discharging Managerial Responsibility

Other individuals in similar positions, such as Directors and other PDMRs, would be well reminded to ensure they know their reporting obligations under MAR since this enforcement action demonstrates that the FCA takes such obligations extremely seriously and will not hesitate to enforce them.

Related Reading:

News & ViewsNews & Views

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.

Compliance Support from Compound Growth Ltd

Please contact our Compliance Support Team for a free no obligation discussion of your regulatory requirements and how our regulatory & compliance consultants can help your business move forward compliantly.

Send Email

Call by Telephone:

(020) 3813 2890

Contact Us Send Email

Call by Telephone:

(020) 3813 2890

Comment from FCA

Transparency of trading by directors and other responsible officers is a key element of market integrity and helps to police the market against illegal insider trading.

Mr Mark Steward, FCA Executive Director of Enforcement & Market Oversight, Dec 2019