The UK’s Financial Conduct Authority, or FCA, has published a Decision Notice today. This notice is in regard to one Conor Foley, the former CEO of the Worldspreads spread-betting firm. This notice detailed how he was fined for a value of £658,900 in regards to market abuse. Furthermore, the financial regulator had banned him from performing any role that can be linked to regulated activity.
Taking The Matter To Higher Authorities
As it stands now, Foley had opted to refer this Decision Notice to the Upper Tribunal. There, both he and the FCA will each present their cases to try and reach a conclusion to this issue. This Tribunal will make judgments in regards to the actions that the FCA had taken against Foley, and will remit the matter to the FCA with various directions that the Tribunal considers appropriate for the matter.
The Illegal Acts
Foley stands as the former CEO of WorldSpreads Limited (WSL) as well as its holding company, WorldSpreads Group plc (WSG). He was involved in the drafting of admission documentation ahead of the flotation of WSG on the Alternative Investment Market section of the London Stock Exchange, doing so back in August of 2007. The regulator states that these documents contained misleading information and further omitted vital pieces of information. This information, the FCA says, would have been needed to make an informed decision about the company at large.
Particularly, the documentation failed to mention the fact that some executives of WSG had made significant loans to the company and its subsidiaries. This wasn’t disclosed on the annual company accounts of WSG, as well, effectively hiding it to the public.
Obfuscation At Its Finest
Further omissions came in regard to an internal hedging strategy, where certain subsidiaries of WSG had hedged substantial amounts of trading exposure internally with company executives. Again, the annual accounts did not disclose this information until at least 2009.
The FCA concluded that during the time frame of January of 2010 and March of 2012, a large number of spread bets were placed on WSG’s shares. This was done through WSL clients’ trading accounts and was done on terms that made several statements of the Annual Accounts in WSG false and misleading. In particular, these false, misleading statements were made in regard to its credit policy.
Alongside this, sizable spread bets were carried out on the accounts of two clients, with Foley himself doing it without the knowledge of the clients. This, according to the FCA, had the effect of giving a perception of higher demand for shares of WSG than what was actually the case.