// Frasers Group could face a possible Financial Conduct Authority probe after chairman bought shares “in error”
// David Daly had bought shares during the closed period, but sold them immediately and donated the £150 profit to charity
// If the FCA pursues a case, it won’t go “all guns blazing”, say analysts
The accidental purchase of nearly 4000 shares in Frasers Group might win its chairman an investigation by the Financial Conduct Authority, but the regulator is unlikely to go in with “all guns blazing”, a financial crime expert has said.
On Tuesday, Frasers Group, part of Mike Ashley’s business empire, said that chairman David Daly had bought around £11,000 worth of shares “in error”.
It comes just days before the firm, which owns Sports Direct, House of Fraser, Jack Wills, Game and Evans Cycles among others, is set to present its full-year results tomorrow.
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City rules stipulates that people who are likely to have access to information from inside a company are banned from trading in its shares 30 days before it releases any financial results. This is known as a close period.
David Savage, a partner at law firm Stewarts, said that accidentally buying a company’s shares during the close period is unusual
“I haven’t heard of it happening before,” he told the PA news agency.
“That’s not to say that it doesn’t happen.”
Frasers Group said Daly sold the shares just 15 minutes after buying them, as soon as the company noticed.
The approximately £150 profit he made from the sale has been donated to charity.
“What’s happened from what I can see is that there wasn’t a red flag that prevented the issuance from the beginning, the buying of shares and the selling of shares in that close period,” Savage said.
“After that something triggered an alarm bell and the situation was rectified very promptly. So it’s not a complete system and controls failure.
“Whether the FCA thinks that is sufficient to not warrant a minor investigation into this, I don’t know.”
He added: “They may be inclined to do it just because it’s a big name and it’s an obvious breach of the market abuse regulations.
“But they may also decide that because it was so promptly picked up that it is an internal matter.
“Is it significant enough for the FCA to give a fine? I’m not sure it is… I’d be surprised if the FCA were to go all guns blazing.”
The FCA rarely comments on ongoing investigations and it did not have an immediate answer when asked if it had been told about Daly’s error, and if it would investigate.
It is not the first time Ashley’s retail empire has attracted scrutiny.
Early in the Covid-19 pandemic, he apologised for trying to keep Sports Direct open even as all other shops had to close, saying it was an essential service.
In 2016, conditions for workers at one of Sports Direct’s warehouses were likened to a Victorian workhouse.
Frasers Group’s full year results due tomorrow were also delayed by one week – making it the second such time its annual results has been delayed after the media storm it created with its delay last year.
with PA Wires