Release Date: 14th February 2013
To access the original FSA document, click here.
Summary
Nestor Healthcare Group Limited was fined £175,000 by the Financial Services Authority (FSA) for failing to ensure compliance with the Model Code concerning share dealings. Without an early settlement discount, the fine would have been £250,000. This penalty was imposed because, from 18 October 2006 to 30 June 2010, Nestor did not adequately secure compliance from persons discharging managerial responsibility (PDMRs) with certain provisions of the Model Code. The company failed both to keep PDMRs informed of their responsibilities under the Model Code and to maintain adequate procedures and controls for compliance.
Nestor’s breach of Listing Rule 9.2.8 and Listing Principles 1 and 2 was largely due to using an ad hoc and informal share dealing process instead of the formal procedure outlined in their own Share Dealing Policy. This resulted in two specific instances where shares were purchased by PDMRs without the required board approvals and another case where a purchase occurred long after clearance was given, contrary to the Model Code’s requirements. Additionally, on four occasions, the company failed to keep records of clearance for share dealings as mandated.
For other firms to avoid similar regulatory issues, it is crucial to:
- Regularly remind and train PDMRs and relevant staff about their responsibilities under the Model Code and any internal share dealing policies.
- Establish and rigorously maintain robust systems and controls to monitor and ensure compliance with share dealing laws and regulations.
- Ensure that all processes for share dealings are formalised and consistently followed, with no deviations into informal or ad hoc methods.
- Keep accurate and comprehensive records of all share dealings and the clearance processes involved.
These measures help maintain transparency and compliance, thus upholding market confidence and ensuring fair and orderly market conduct.
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