Punishers at the Financial Services Authority have censured consultancy firm BDO for failings during the reverse takeover of Puma Brandenburg by Short Capital in 2009.
Punishers at the Financial Services Authority have censured consultancy firm BDO for failings during the reverse takeover of Puma Brandenburg by Short Capital in 2009.
In what is the first ever public censure of a sponsor for breaching the Listing Rules, BDO was found to have deliberately delayed contacting the UK Listing Authority about the deal in an attempt to avoid the suspension of Shore Capital’s shares.
Regulators found that it attempted to avoid classifying the transaction as a reverse takeover, despite acknowledging that this strategy was highly unlikely to succeed.
Marc Teasdale, head of department for the UK Listing Authority, said that sponsors provide important protections for investors and the market under the Listing regime.
He explained, ‘They are entrusted to provide sound and expert guidance to issuers on their obligations, and are relied upon to be open with the UKLA. ‘BDO failed in its responsibilities as a sponsor on this transaction and we are sending a clear message with this public censure about the importance we attach to the sponsor role.’
The Listing Rules state that a suspension of the listed company’s shares will often be appropriate during a reverse takeover, unless the UK Listing Authority (UKLA) is satisfied that there is sufficient information already in the market.
These requirements are in place to ensure the smooth operation of the market and in the interests of investor protection and market confidence.
The UKLA today said that it relies on sponsors to ensure that issuers meet their obligations under the Listing Rules and it is therefore crucial that sponsors deal with the FSA in an open and co-operative manner.
BDO and the former partner who led the BDO team on the transaction have accepted the FSA’s decision and cooperated fully with the FSA’s investigation.
BDO said it has made changes to its operations which are designed to ensure compliance with the sponsor rules in the future.
