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Regulation

FCA Accuses Four Asset Managers of Breaking Law

Statement of objections initiates regulator’s first enforcement case.

By Michael Katz

UK regulator the Financial Conduct Authority (FCA) said it believes four asset management firms may have broken competition law by colluding on IPO price information. It is the first case the FCA is bringing using its competition enforcement powers.

The FCA issued a statement of objections to Newton Investment Management, Artemis Investment Management, Hargreave Hale Ltd, and River & Mercantile Asset Management LLP. According to the FCA, the four firms allegedly shared information by disclosing the price they intended to pay in relation to one or more of two IPOs, and one placing, shortly before the share prices were set.

“The sharing generally occurred on a bilateral basis and allowed firms to know the other’s plans during the IPO or placing process when they should have been competing for shares,” said the FCA in a release.

According to the allegations, Newton Investment Management, Hargreave Hale, and River & Mercantile Asset Management disclosed and/or accepted information about the price they intended to pay for shares in relation to one IPO, and a placing, both in 2015. And in 2014, Artemis Investment Management and Newton allegedly shared information about the price they intended, or were willing to pay, for shares in relation to another IPO.

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“The FCA will carefully consider any representations from the firms before deciding whether the law has been broken,” said the FCA. “Any final decision taken will be published providing more detail about the case.

London-based Newton Investment Management, which is a subsidiary of BNY Mellon, has assets under management of £55 billion, while Artemis manages £27 billion. Hargreave Hale was acquired by Canaccord Genuity Wealth Management in September.

The FCA said the findings are provisional, and may not necessarily lead to an infringement decision. A statement of objections, such as the ones issued to the four firms, gives notice that the FCA believes they have infringed competition law, and allows the companies the opportunity to respond with written and oral representations, which will be considered before any final decision is taken. The final decision is made by a three-member Competition Decision Committee group, which is separate from the case investigation team, and is not involved in the decision to issue the statement of objections.

In 2015, the FCA gained concurrent powers to enforce competition law under the Financial Services and Markets Act 2000.

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Home > News > Newsmakers > FirstGroup First Private Firm to Consolidate Pensions under LGPS
Newsmakers

FirstGroup First Private Firm to Consolidate Pensions under LGPS

Move will bring three funds under control of one administrating authority.

By Michael Katz

UK-based transport operator FirstGroup, which owns US-based Greyhound bus lines, has become the first major private sector employer to successfully consolidate its pension plans’ assets within the Local Government Pension Scheme (LGPS).

The consolidation, which will be led by investment consultant Hymans Robertson, will involve the transfer of £700 million ($947.1 million) of FirstGroup’s assets from two LGPS funds—the West Yorkshire Pension Fund and the South Yorkshire Pension Authority—into the Greater Manchester Pension Fund (GMPF) to form a £1 billion fund.

The LGPS is the largest defined benefit plan in England and Wales, with more than 11,000 employers, 5 million members, and assets of £217 billion. The LGPS is a statutory public service scheme, so the plan’s benefits and terms are set out in regulations passed by British Parliament. It is administered locally through 101 regional pension funds.

“The consolidation will enable us to better manage the risks across our LGPS schemes, giving us greater control over investment strategy, an improved balance sheet, and will enable us to better manage our funding across these obligations,” said Richard Murray, group head of pensions at FirstGroup, in a statement. “This will allow us to improve cost control while maintaining members’ benefits.”

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The consolidation will bring the company’s three English LGPS funds under the control of one administrating authority, which is intended to increase efficiencies, reduce operating costs, and to align the funding and investment strategies across its plans with FirstGroup’s preferred de-risked investment strategy.

“By pooling its LGPS funds, FirstGroup will not only reduce the issues brought by this complexity but will also gain greater influence over its overall investment strategy,” said Malcolm Stanley, senior consultant at Hymans Robertson. “Ultimately, it will be able to work with the GMPF to design a bespoke investment strategy that better reflects its mature liabilities and benefit scheme members.”

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