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May 31, 2011

FSA censures Shore Capitals’ sponsor BDO

BDO UK has become the first sponsor to be publicly censured by the Financial Service Authority (FSA).

The FSA said BDO did not satisfy the requirements in its role as a sponsor on Shore Capital Groups proposed merger with Puma Brandeburg Limited in 2009.

As Shore Capital’s shares were listed on the Official List and traded on the London Stock Exchange, the investment bank was required to suspend its shares when it had confirmation the reverse takeover was to take place unless the UK Listing Authority (UKLA) was satisfied there was enough market information about the merger.

The FSA said BDO failed to liaise with the UKLA and tried to avoid classifying the transaction as a reverse takeover. The FSA said BDO agreed with Shore Capital that it should delay contacting the UKLA until after announcing the merger was to take place.

“Sponsors provide important protections for investors and the market under the listing regime. They are entrusted to provide sound and expert guidance to issuers on their obligations and are relied upon to be open with the UKLA,” UKLA head of department Marc Teasdale said.

“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 rule.”

BDO said it subsequently made changes to its operations to ensure compliance with sponsor rules in the future.

 

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