The news follows a trading update in December last year wherein the firm said it was expecting a substantial fine to be imposed.
According to the Financial Conduct Authority, WH Ireland breached the regulator’s third Principle of business which covers a firm’s management control.
The regulator said that between 1 January and 19 June 2013, WH Ireland “failed to ensure it had the proper systems and controls in place to prevent market abuse being detected or occurring.”
The breach included: weak market abuse controls, deficient compliance oversight, poor governance, including a lack of clearly allocated responsibilities, and no formal way of identifying and recording what training had been given and to whom, the FCA said.
These breaches were considered to be particularly serious because of the range of services performed over the period by WH Ireland, which meant it was exposed to a broad range of market abuse risk.
Skilled person report
According to the regulator, concerns were first raised with the firm in June 2013 and on 10 July of that year the FCA instructed the firm to commission a Skilled Person’s report.
The Skilled Person identified weaknesses in both WHI’s ability to identify and mitigate risks associated with market abuse and in the ability of the compliance department to administer market abuse related systems and controls, the FCA said, which the firm agreed to implement. In July 2014, an implementation report was commissioned and, while WH Ireland was found to have implemented some of the recommendations, some that had not been implemented adequately.
Mark Steward, director of enforcement and market oversight at the FCA, said: “In this case, WHI’s failings were aggravated by the failure to implement adequately the skilled person’s recommendations. It is one thing to be given a chance; for the chance not to be taken up is especially culpable.”
However, the FCA added: “The authority recognises that the firm has made and continues to make significant changes to its management team. These changes began in mid-2012 when a number of the key issues identified within the Skilled Persons report had begun to be addressed. The Authority recognises the firm’s cooperation with its investigation.”
In a statement to the stock exchange, WH Ireland said the seriousness with which it has taken the issue is reflected in the “significant investment that the firm has made both in time to address these issues and in the recruitment of a new senior management team to instil and ensure best corporate practice”.
WH Ireland chief executive, Richard Killingbeck, added: “As the FCA has noted we have made, and continue to make, wholesale changes to our management team and our systems and controls. We regret that we fell short of the FCA’s expectations but since the beginning of my tenure in early 2013, significant changes have been made at the company and new specific oversight functions have been created.
“Looking forward, we, the management team can now focus our efforts on developing both our Wealth Management and Corporate Broking divisions, and continue to provide a high level of service for clients, alongside driving revenues and creating long term value for our shareholders. We are pleased that this matter has been fully resolved with the FCA.”
In other corporate news, the firm announced a placing to raise £1.1m from the issue of 1,193,000 new ordinary shares of 5p each at a price of 90p per share.
According to Killingbeck, the placing will help ensure the firm’s balance sheet “retains the strength and flexibility for the Company’s future known requirements”.
Shares in the firm were up 6.5% on the news.