UK FCA Primary market bulletin No. 62

The UK Financial Conduct Authority (FCA) has published Primary Market Bulletin 62. The bulletin highlights concerns about potentially manipulative investment approaches affecting micro-cap and small-cap issuers' share prices, specifically an increase in: (i) fake investor approaches, where parties pose as genuine investors and leak news of a supposed takeover or push disclosure of the approach to the market to inflate share prices; and (ii) equity fundraisings linked to pump and dump schemes, often involving the issuance of large numbers of warrant instruments. Warrants are then exercised and the shares sold at the increased share price. The FCA emphasises the importance of robust due diligence by quoted companies and their advisers before engaging with investment proposals, including verifying investor identities, assessing whether proposals are genuine and reviewing investors' track records for similar transactions.

The FCA also provides feedback from its recent reviews of sponsors' work on the modified transfers process under the UK Listing Rules, sharing observations on due diligence, sponsor judgement and compliance with eligibility requirements. The FCA states it is encouraged to see the modified transfers process being used and sponsors applying their expertise and judgement.

In addition, the FCA notes the deadline of 20 April for responding to its consultation on proposed clarificatory amendments to the Prospectus sourcebook (PRM), in chapter 5 of the FCA's Quarterly Consultation Paper No. 51.

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