Compliance Corner: UK Fines Metro Bank For Incorrect Information

Editorial Staff

13 December 2022

The has fined Metro Bank £10,002,300 ($12.3 million) for publishing incorrect information to investors that, when corrected, produced a slump in the bank’s share price in January 2019.

The conduct broke listing rules, the UK regulator said in a statement yesterday.

The FCA also fined Metro’s former chief executive Craig Donaldson and former chief financial officer David Arden £223,100 and £134,600, respectively, for being knowingly concerned in Metro Bank’s breach.

“Metro Bank published incorrect information concerning its RWA figure in its third quarter trading update (the October announcement) on 24 October 2018,” the FCA said. Metro Bank was aware at the time that this figure was wrong and failed to qualify it or explain in the October announcement that it was subject to an ongoing review and would require a substantial correction, the statement said. When the correct RWA figure was announced in January 2019, it contributed to a 39 per cent fall in Metro Bank’s share price, the FCA said.

The bank has not referred the FCA’s decision to the Upper Tribunal. However, Donaldson and Arden have referred their respective Decision Notices to the Upper Tribunal where they will each present their case. The FCA said any findings in the individuals’ Decision Notices are therefore provisional and reflect the FCA’s belief as to what occurred and how it considers their behaviour should be characterised.

The Upper Tribunal will determine whether to uphold the FCA’s decisions against the two individuals or not and whether there are any other actions that should be taken by the FCA.

Explaining the case, the FCA said that Metro Bank regularly reported its prudential position to the market, including the risk weighted assets on which its regulatory capital requirements are based.

“Metro Bank published incorrect information concerning its RWA figure in its third quarter trading update (the October announcement) on 24 October 2018,” the FCA said.

Metro Bank was aware at the time that this figure was wrong and failed to qualify it or explain in the October announcement that it was subject to an ongoing review and would require a substantial correction, the statement said.

The regulator said Metro Bank also failed to consider, and to seek legal advice on, whether the incorrect RWA figure ought to be qualified or explained in the October announcement.

“As a result, Metro Bank failed to take reasonable care to ensure that the October announcement was not false and misleading and did not omit relevant information,” it continued.

“The FCA considers that Mr Donaldson and Mr Arden were knowingly concerned in Metro Bank’s breach of the Listing Rules. They were aware that the RWA figure in the October announcement was wrong and would require substantial correction. Despite this, they failed to consider whether the figure ought to be qualified or explained and failed to seek legal advice on this question,” it said.

“Listed firms must ensure that the information they are disclosing to the market is right. This is what investors are entitled to receive,” Mark Steward, executive director of enforcement and market oversight, said:

Metro Bank was admitted to the Official List of the London Stock Exchange in 2016 and, at the time of the announcement, was a member of the FTSE 250.