Aviva’s decision to cancel securities shares backfires, as investors convince it to reverse the decision and the FCA steps in
The FCA is unofficially investigating Aviva’s decision to cancel £450m of securities shares, despite Aviva having decided not to go ahead with the move following backlash from investors.
In a letter to Treasury Select Committee chair Nicky Morgan, FCA chief executive Andrew Bailey welcomes Aviva’s u-turn decision not to cancel the shares, but suggests that the original move could have flouted the Market Abuse Regulation (MAR).
Bailey writes: “The FCA welcomes the fact that the company has since clarified the position in its announcement on the 23 March 2018 and Mark Wilson’s statement that ‘preference shareholders can rest secure in their holdings’.”
However, Bailey adds: “The FCA’s enquiries continue and, in particular, we are focusing on the treatment of those holders (and potentially now former holders) of the company’s irredeemable preference shares that may have lost out financially as a result of these events. I will update the committee, and other MPs who have written to me on this point, in due course.”
If the FCA were to officially probe the case, it would do so as a markets regulator, rather than a financial services regulator.
This is because the flagged activity relates to shares rather than Aviva’s financial services activities.
The penultimate paragraph of Bailey’s letter to Morgan reads: “In summary, the FCA will continue with its enquiries into the disclosures made by the company prior to its announcements regarding the company’s proposed return of capital. We will also monitor events carefully, paying particular attention to the treatment of the holders of the company’s affected preference shares during the relevant period and to wider market for similar instruments.”