On Thursday, Finanstilsynet released its summary report after looking closely at a selection of IPOs in the Euronext low-threshold growth market. On Monday, individual reports were also released about the brokerages that were part of the sample.
It is reported that Finanstilsynet has discussed how employees of brokerage firms trade stocks in publicly listed companies with three of the seven brokerage firms: ABG Sundal Collier, DNB Markets and Carnegie.
– The non-compliance of investment companies with laws and regulations is a serious matter. However, in this case, Finanstilsynet did not reveal serious licensing violations, but we emphasized in the reports the need for improvement in several areas, says Division Director Roy Halvorsen at Finanstilsynet.
Ten employees bought stock
At ABG Sundal Collier, which contributed to the listing of Kjell Inge Røkke’s renewables Aker Horizons and chess firm Play Magnus, ten employees purchased shares in a company from the first trading day to two days before the brokerage issued its statements. Customer first analysis report.
The first ABG analysis was published 29 days after the first trading day.
It appears that all proprietary trading in the company in question for the 10 employees has been approved and carried out in contravention of the company’s own instructions, which state that no proprietary trading can take place between the “investment banking transaction” and the day after the company’s publication. Next Interim Report,” the audit wrote in its preliminary assessments.
In the audit, Finanstilsynet gives its initial assessment, before allowing the brokerage to respond, which gives the audit its final assessment.
The authority now expects the brokerage firms to comply with the conclusions contained in the report.
We made it clear to the three companies that the rules for proprietary trading are in place to ensure that confidence in the market is maintained. It is emphasized that investment firms must have a high level of awareness of employee trading, and they must critically evaluate each individual trade that employees seek, says division manager Halvorsen.
In its response to the review, ABG wrote that the ban on proprietary trading in the relevant period was changed prior to the transactions being audited. The reason is that the brokerage firm, which is also large in Sweden, wanted to align the internal rules with the Swedish self-trading rules.
“There were no members of the project team for [det aktuelle oppdraget] which are approved for self-trading during the period. In other words, no monopolistic trading has been approved or executed in violation of existing internal rules,” the brokerage writes.
Finanstilsynet concludes by recalling that the rules of proprietary trading are important to public confidence in the stock market, and that employees should be prevented from using their positions for private benefits. At the same time, take note of the ABG response.
“Finanstilsynet will, however, emphasize that investment firms must ensure that the risks of conflict of interest between the Company and its clients, or the Company’s clients among themselves, are kept to a minimum and that market integrity is best protected,” she says.
DN has been in contact with Are Andersen, Head of Investment Banking at ABG. He did not have the opportunity to answer questions about the report.
DNB and Carnegie
Finanstilsynet has also handled deals for brokerages at Carnegie and DNB Markets.
At Carnegie, where the business audit considered listings for Flyr, Aker Carbon Capture and Aker Horizons, an employee bought shares in one of the three companies 16 days after the first trading day.
Carnegie acknowledges that this is a violation of its own instructions, but the brokerage adds that the analysis department’s actions are “based on confidentiality with employees outside the department,” and therefore there was no reason to believe that the person concerned knew whether coverage should be taken, and in this case when it was. Publish analytics.
At DNB Markets, one employee traded shares in one company Aker Horizons, Kingfish Company and Salmon Evolution Holding on the first trading day, while two employees bought shares in the other company on the first trading day.
In its response, DNB wrote that “no employees have ‘knowledge of the content of the analysis or the likely time to be published”.
Finanstilsynet also reminds DNB Markets and Carnegie to consider market confidence, takes note of the data, and recommends a precautionary measure. The two are also required to include in their instructions that the rules apply to information regarding both the content of the analysis and the likely time of publication.
No audio recording
In addition to notes about proprietary trading, Finanstilsynet also pointed the finger at ABG Sundal Collier and Sparebank 1 Markets for the lack of audio recordings of conversations with the companies. According to the review, brokerage firms must record conversations “aimed at providing investment services.” This type of document must be stored for at least five years, and it is provided so that the body can ensure compliance with the rules.
In ABG’s case, the brokerage house turned over some audio recordings of conversations with the companies, but the audit deemed the material to be “random and incomplete”. Meglerhuset writes, however, that it has followed the industry’s recommendation from the Norwegian Association of Securities Companies not to make any registration of communications in connection with the “location”, that is, the capital increase.
In both the ABG and Sparebank 1 markets, the authority believes that the brokerage firms have not complied with the Voice Recording Act and documentation requirements. After the audit, the latter has made adjustments to its acceptance compliance procedures, as reported, while ABG will begin taking measures to evaluate the acceptance procedures.
In both cases, the authority wrote that it now expects the two brokerages to conduct “independent assessments of existing regulations.”
Stock exchange manager does not agree
the The public report from Finanstilsynet last week was crystal clear, where the authority believed, among other things, that Borsen’s processing of lists was “partly characterized by very fast operations”:
– We said that procedures should be implemented with regard to listings on both the Oslo Stock Exchange and brokerage firms. It’s not good enough as it is now, said Ann Merethi Bellamy, who heads Finanstilsynet’s division of market oversight.
After the report came Both Jean-Peter Sisner and Harvard investor Neshem deal with cash.
Stock Exchange Director Øivind Amundsen On the other hand, he was aware that “Finanstilsynet did not touch any serious matters”.
On the other hand, an audit indicates that the practice in which we operate should be defined in the regulations to a greater extent than before. Amundsen said these are adjustments we fully agree with.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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