By Ben Lucas
The London Stock Exchange’s AIM market has not issued any public fines since November 2021, according to the latest available figures, raising questions about its supervision of the junior exchange.
According to data on its website, AIM regulators only fined one company in 2020 and two companies in 2019 prior to this.
While it has the power to issue private censures—where it announces a fine but does not name the company—it has not issued one since 2018. It only handed out two public fines that year.
Matthew Nunan, a former official at the Financial Conduct Authority (FCA), said the lack of fines demonstrated a slowdown in enforcement compared to previous years.
“It seems very unlikely that the behaviour of AIM-listed companies has changed sufficiently to be responsible for the drop in published outcomes,” Nunan, who is now a partner at law firm Gibson Dunn, told City A.M.
Despite the lack of enforcement activity, AIM insisted it was still actively monitoring the junior market alongside other agencies, like the FCA.
“Working with the other regulators that have a remit covering AIM, we actively regulate AIM to maintain the reputation and integrity of our market,” Marcus Stuttard, head of AIM and UK Primary Markets at the London Stock Exchange, told City A.M.
“Public censures are only one enforcement action available and reserved for the most serious rule breaches. Our regulatory engagement through education and active supervision are more effective tools in the majority of circumstances,” Stuttard added.
“Public censures are only one enforcement action available and reserved for the most serious rule breaches. Our regulatory engagement through education and active supervision are more effective tools in the majority of circumstances.”
Keith Lassman, head of capital markets at law firm Howard Kennedy, said that the sharp drop in listing activity in London also helped to explain the dip in enforcement.
“AIM activity has been very quiet for the past few years, and these would often throw up issues that the regulator would get involved in,” Lassman told City A.M.
Brad Isaac, head of equity capital markets at law firm Fieldfisher, supported Stuttard’s case that the exchange was striving to weed out potential problems prior to a listing on AIM.
“They are far more active in assessing suitability of the issuer in the run up to an IPO via the early-look notification process,” Isaac told City A.M.
Isaac also said investigations can sometimes “take a couple of years” to get to the point of taking action after receiving notice of a possible regulatory breach, and warned that more actions could still be in the pipeline despite the lack of penalties.
“We would expect that there are currently matters that AIM Regulation are dealing with, and on which they will take action, which are not yet public,” he added.
