FCA Publishes Decision Notice Against Former Worldspreads CEO

The Financial Conduct Authority (FCA) announced today it has published a Decision Notice in respect of Conor Foley, former chief executive officer of Worldspreads, fining him £658,900 for market abuse and banning him from performing any roles linked to regulated activity.

The FCA stated that Foley has referred the Decision Notice to the Upper Tribunal (the Tribunal) where he and the FCA will each present their cases.

The Tribunal will determine what, if any, is the appropriate action for the FCA to take, and will remit the matter to the FCA with such directions as the Tribunal considers appropriate for giving effect to its determination.

The Tribunal’s decision will be made public on the Upper Tribunal website. Accordingly, the proposed action outlined in the decision notice will have no effect pending the determination of the case by the Tribunal.

The FCA noted that the Decision Notice, which reflects the regulator’s view of what occurred, outlines the reasons for its actions.

Reasons

Foley, former CEO of WorldSpreads Limited, and its holding company WorldSpreads was involved in drafting admission documentation ahead of WSG’s flotation on the Alternative Investment Market of the London Stock Exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term in August 2007, according to the FCA.

The regulator stated that it considers that these documents contained misleading information and omitted key information that investors would have needed to make an informed decision about the company.

In particular, the documentation did not mention that some WSG executives had made significant loans to WSG and its subsidiaries. This was also never disclosed in the annual company accounts.

It also did not mention an internal hedging strategy by which certain of WSG’s subsidiaries hedged considerable trading exposures internally with company executives. This was not disclosed in the annual accounts until at least 2009.

The FCA also revealed it considers that between January 2010 and March 2012, large spread bets were placed on the shares of WSG on the trading accounts of WSL clients on terms which made statements in WSG’s Annual Accounts as to its credit policy false and misleading.

“In addition, large spread bets were carried out on two clients’ accounts by Foley himself without the knowledge of the clients and this had the effect, in the view of the FCA, of giving the appearance of greater demand for WSG shares than in fact existed,” the FCA stated.

More cases at WSL

Foley is the third and last executive of WSL against whom the FCA has taken action following its collapse in March 2012, according to the regulator.

The FCA fined and banned WSL’s CFO, Niall O’Kelly, and its financial controller, Lukhvir Thind, in April 2017 for falsifying critical financial information concerning WSL’s client liabilities and its cash position, which was passed to the company’s auditors.

By 31 March 2011, these misstatements amounted to £15.9 million. WSL was unable to meet this Client Money Client Money Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Read this Term liability which ultimately led to its collapse.