The Royal Mail and the FCA

The Guardian:

A senior City regulator has come under sustained pressure from MPs to explain why he did not order a full-blown investigation into the sell-off of Royal Mail after the shares rose by 38% on the first day.

Martin Wheatley, chief executive of the Financial Conduct Authority(FCA), repeatedly told the public accounts committee that he had not seen any evidence to warrant an investigation by his regulator into the sale of the postal operator last year.

Royal Mail shares have risen as much as 87% since their flotation in October, although they have now fallen back from their highs to close last night at 511.5p. They were initially priced at 330p.

During often hostile questioning, Wheatley said the regulator would launch enquiries into unexplained share movements but that Royal Mail did not fall into this category.

“What’s an unusual share price movement if it’s not 38%?” said Margaret Hodge, the Labour MP who chairs the committee.

Wheatley said: “Most IPOs are priced to see some jump on the first day, and around the world that’s a familiar model. Maybe this was a bigger increase than most, but typically they are priced to go.”

Wheatley was giving evidence at the start of a week in which parliamentarians are putting the focus back on the sale of Royal Mail after the National Audit Office (NAO) concluded the government had cost taxpayers £750m in a single day by selling the shares too cheaply.

… Wheatley elicited cries of incredulity when he said, sitting alongside his colleague William Amos, that he could not name any fines handed out by the FCA for conflicts of interest within investment banks between advisors handling share sales and the fund management arm which would buy the shares.

There is supposed to be a “Chinese wall” between the two, and Wheatley said a threshold for an investigation had not been passed by either the share price move or the large number of banks involved.

Another regulator who is just a placeholder for appearance and has no interest in holding the industry to account.