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The FCA considers that Cathay breached the FCA’s Listing Principles and Disclosure Rules and Transparency Rules (DTR) and has imposed a fine of £411,000. In the FCA’s view, Mr Lee was knowingly concerned in the company’s breaches and so has been fined £214,300. The FCA also considers that Mr Siu was knowingly concerned in one of the company’s breaches and so has been fined £40,200.
Cathay, Mr Lee and Mr Siu still have the right to refer their respective Notices to the Upper Tribunal where they and the FCA can each present their cases. If the Notices are referred, the Upper Tribunal will determine what, if any, the appropriate action is for the FCA to take, and remit the matter to the FCA with such directions as the Upper Tribunal considers appropriate to give effect to its determination. The Upper Tribunal’s decision will be made public on its website. Accordingly, the proposed action outlined in the Decision Notices will have no effect pending the determination of the case by the Tribunal, should the cases be referred to it.
Cathay’s financial performance deteriorated over the course of 2015 due to various issues in its group. In the FCA’s view, there were serious procedures, systems and controls failings within the company which meant that Cathay did not monitor the full impact of these issues on its expected financial performance for the year ended 31 December 2015 compared to market expectations.
The FCA considers that Cathay recklessly breached Listing Principle 1, which requires a listed company to take reasonable steps to establish adequate procedures, systems and controls to enable it to comply with its obligations.
As a result of these failings, the FCA also considers that Cathay recklessly failed to disclose to the market as soon as possible on or shortly after 6 December 2015 a material change in its actual and expected performance for the year ended 31 December 2015 compared to market expectations. This breached DTR 2.2.1R and meant relevant information was not released to the market as soon as it should have been, in breach of Premium Listing Principle 6.
The FCA also considers that between 29 February 2016 and 16 August 2016 Cathay breached Listing Principle 2, which requires a listed company to deal with the FCA in an open and co-operative manner. Cathay responded to a request by the FCA for the actual forecasting procedures undertaken at the relevant times in 2015. However, in the FCA’s view the information Cathay provided on two occasions was materially different to the actual procedures followed at the relevant times in 2015 and this was done without any explanation.
The FCA considers that Mr Lee, the company’s Chief Executive Officer, was knowingly concerned in the company’s breaches, and acted recklessly in respect of Cathay’s breaches of Listing Principle 1, DTR 2.2.1R and Premium Listing Principle 6.
The FCA also considers that Mr Siu, the company’s Finance Director, was knowingly concerned in Cathay’s breach of Listing Principle 2. In the FCA’s view, Mr Siu was responsible for drafting the correspondence with the Authority and knew that the information being provided was not a contemporaneous record of events.
Mark Steward, Executive Director of Enforcement and Market Oversight, commented:
‘Market integrity includes responsible directors who faithfully ensure listed companies have adequate procedures, systems and controls for compliance with listing obligations, announce relevant information in a timely manner and are open and co-operative with the FCA. These cases show that we will hold to account not only the company, but also its directors for breaches of these important obligations.’
The company announced on 31 May 2019 that Cathay, Mr Lee and Mr Siu are considering whether to refer the FCA’s decision to the Upper Tribunal.
Notes to editors
- The Decision Notice for Cathay International Holdings.
- The Decision Notice for Mr Jin-Yi Lee.
- The Decision Notice for Mr Eric Siu.
- Cathay International Holdings Limited (LSE: CTI.L) is a main market premium listed trading company.
- On 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this, it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.