FCA

Fevertree Fall, Trading Times and More on HBOS/Lloyds

Last week when I spoke at the Mello event I talked about my investment winners over the past few years. One of them was Fevertree (FEVR) but I was...

FRC New UK Stewardship Code and FCA response to DP19/1 Consultation

The UK Stewardship Code 2020 is (according to the FRC) “a substantial and ambitious revision” to the 2012 edition of the Code which takes effect from 1 January 2020. The FRC says “The new Code sets high expectations of those investing money on behalf of UK savers and pensioners. In particular, the new Code establishes a clear benchmark for stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, ...

Woodford and Hargreaves Lansdown

To follow up on my previous blog post over the collapse of Woodford Investment Management and how to avoid dud managers, the focus has now turned in the national...

Burford – a chance to clear out the stables or a case of nothing to see?

The Burford Capital soap opera rumbles on, and for those who don’t hold shares, the temptation to ignore the story, or even worse, fall into the lazy belief that...

Renold Accounts, Audit Quality and Abnormal Price Movements

Chain maker Renold (RNO) has provided the latest example of sloppy accounting work. On the 9th July it reported that it had identified accounting issues in the three years ending March 2017, 2018 and 2019. Assets and profits were overstated and liabilities were understated in the Torque Transmission division. In total adjusted operating profits were overstated by £1.8 million. As a result the AGM is being postponed to give time for revising the Annual Accounts. Their auditors are Deloitte. The Financial Reporting ...

Redcentric (RCN) Campaign: Important Developments

There have been important developments in our campaign regarding the accounting scandal at IT service group, Redcentric. Firstly the FRC have moved at "lightning speed" (by their usually interminable standards), and published their findings in little more than two years after the matter was brought to their attention. And secondly there is news on the parallel FCA investigation in Redcentric's recently published annual results for 2018/19. FRC Report The FRC concluded that Redcentric's auditors, PwC, did not meet expected professional standards in their audits ...

Bonmarché Update, FCA Grilling over Woodford and Amati AIM VCT AGM

Yesterday Bonmarché (BON) conceded defeat in its opposition to a takeover bid at 11.4p. On the 17th May it had rejected the bid because it “materially undervalues Bonmarché and its prospects”. The share price of this women’s clothing retailer was over 100p a year ago but the latest trading review suggests sales are dire because of underlying weakness in the clothing market and “a lack of seasonal weather”. Auditors might have qualified the accounts due to be published soon due to ...

Closet Indexing

I am returning to the subject of closet indexing, which is the name given to asset managers who claim to be active managers and charge active fees, but make their investments so that they are unlikely to underperform the index or outperform it. We have made the point to the FCA in a consultation response about the problems with closet trackers. It is good to see the FT giving the issue high profile coverage. The FT published an article on 8 May ...

Warren Buffett and FCA Review of RDR & FAMR

There was an interesting article on the career of Warren Buffett in the last FT Weekend magazine. It was a wide-ranging interview with the renowned investor who became one of the richest persons in the world by making investments which consistently outperformed the markets over the last 50 years. At age 88 he still claims to be having fun by working at investment. But in the last ten years he has fallen behind the S&P index. The reason is primarily because he ...

ShareSoc and UKSA make joint response to FCA/FRC Consultation on Effective Stewardship

In January 2019, the FCA and FRC  issued a joint discussion  paper DP19/1 Building a regulatory framework for effective stewardship. On 15 April 2019, we made a joint response from UKSA and ShareSoc on behalf of individual investors. In our response we make the following key points: Investor stewardship must not let boards off the hook for their own stewardship. The Stewardship Code should be renamed the Investor Stewardship Code to better reflect what investors do and to better acknowledge the role of ...

FCA Consultation on proposals to improve shareholder engagement

In January the FCA issued a consultation paper CP19/7 Financial Conduct Authority Consultation on proposals to improve shareholder engagement. This was a technical consultation on how to implement the EU Shareholder Rights Directive II in relation to its Stewardship aspects. Today 27 March UKSA and ShareSoc made a joint response, on behalf of individual investors. We made a number of points, see below, with further background in an Appendix. We think this is important context to our response to the FCA consultation as ...

FCA Makes Platform Switching Easier

The Financial Conduct Authority (FCA) have today announced some measures to improve competition in the platforms market. Experienced investors who use electronic trading platforms will be well aware of the problems of switching to another provider if they are dissatisfied with the service, wish to move to a cheaper provider or for other reasons such as consolidating on one provider or spreading their risk over several. It simply takes too long to move “in-specie” holdings from one platform to another  ̶  ...