The Financial Conduct Authority (FCA) has fined Metro Bank £10m for breaching the listing rules by publishing incorrect information to investors.
The FCA has also decided to fine Metro Bank’s former CEO Craig Donaldson and former CFO David Arden for being knowingly concerned in Metro’s breach.
As part of its quarterly financial results, Metro regularly reported to the market on its prudential position, including the Risk Weighted Assets on which its regulatory capital requirements are based.
Metro Bank published incorrect information concerning its RWA figure in its third quarter trading update (the October Announcement) on 24 October 2018.
Metro was aware at the time that this figure was wrong and failed to qualify it or explain in the October Announcement that it was subject to an ongoing review and would require a substantial correction.
The company also failed to consider, and to seek legal advice on, whether the incorrect RWA figure ought to be qualified or explained in the October Announcement. As a result, Metro Bank failed to take reasonable care to ensure that the October Announcement was not false and misleading and did not omit relevant information.
The FCA considers that Mr Donaldson and Mr Arden were knowingly concerned in Metro Bank’s breach of the Listing Rules. They were aware that the RWA figure in the October Announcement was wrong and would require substantial correction.
Despite this, they failed to consider whether the figure ought to be qualified or explained and failed to seek legal advice on this question. When the correct RWA figure was announced in January 2019, it contributed to a 39% fall in Metro Bank’s share price.
FCA executive director of enforcement and market oversight Mark Steward said, “Listed firms must ensure that the information they are disclosing to the market is right. This is what investors are entitled to receive.
“The UK’s Listing Rules impose high standards on issuers and their officers which Metro Bank, Mr Donaldson and Mr Arden failed to meet in this case.”
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Copyright © 2018 RegTech Analyst
