According to the Financial Conduct Authority (FCA), while Stephany was a fund manager at Newton Investment Management he submitted orders as part of a book build for shares that were about to be quoted on public exchanges.
Before the order books for the shares were closed, he contacted other fund managers at competitor firms in an attempt to persuade them to cap their orders at the same price limit that he had chosen.
His action in trying to use the firms’ collective power, the FCA found, threatened to undermine the integrity of the market and the book build.
Stephany had also acted without due skill, care and diligence because he did not properly consider the risks involved in making those communications.
“This matter underscores the importance of fund managers taking care to avoid undermining the proper price formation process in both IPOs and placings,” said Mark Steward, the FCA’s executive director of enforcement and market oversight.
“These markets play a vital role in helping companies raise capital in the UK’s financial markets and when they are put at risk, the FCA will take action,” he added.
Stephany started his career as a trainee chartered accountant in PwC’s financial services tax team, working with insurance clients. However he did not qualify because, as he says, he developed a love for investment and decided to move on in his career.
He joined Newton as an assistant fund manager in November 2005. More recently, he has been working as a business consultant, providing consultancy services to independent sell-side firms.
In a separate investigation (in which Stephany is not involved), the FCA is investigating whether Newton Investment Management, together with three other asset management firms - Artemis Investment Management, Hargreave Hale and River & Mercantile Asset Management – broke competition law.
It is the first time the FCA has used its competition enforcement powers under the Competition Act 1998.
In provisional findings, the regulator alleges that, at a time when the four firms should have been competing for shares, they shared information about the price they intended to pay in relation to one or more of two IPOs and one placing, shortly before the share prices were set.
The FCA says it will announce the outcome of the investigation “in due course”.