FCA enforcement against PDMR

24/12/2019

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Related topics: ContentiousDirectorsEnforcementFCAMarket abuse

The case is notable, not just for being the first such enforcement, but also because the individual was not a director of the listed company but was a managing director sitting on the company’s executive committee and therefore a person discharging managerial responsibilities (PDMR) under MAR.

In this case, the managing director engaged in three separate trades without notifying the company or seeking clearance to deal in accordance with the company’s share dealing code. Despite having been sent the relevant notifications (in respect of the share dealing code and his obligations as a PDMR under MAR), the managing director claimed he was not aware of the obligation under MAR or share dealing code. Needless to say, the FCA did not regard this as a defence.

When the FCA decides to impose a fine, primarily it will look to set the fine based on any profits made (disgorgement of profits). In this case, because the individual had not profited through the undisclosed trades, the FCA instead set the fine based on his salary – setting the rate at 10% of his salary (less a 30% discount for cooperating with the FCA).

This enforcement by the FCA will serve as a reminder to directors and other PDMRs of their reporting obligations under MAR and demonstrates that the FCA takes such obligations seriously and is prepared to enforce them.

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