LSE announces disciplinary action against Jub Capital
London Stock Exchange (LSE) today announces that its Disciplinary Committee has approved a Consent Order, agreed between the Exchange and Jub Capital Management LLP.
Pursuant to the terms of the Consent Order, Jub Capital has been publicly censured by the Disciplinary Committee for breaches of:
- Rules 1020.1 and 1020.3 (Suitability – adequate procedures and controls);
- Rule 1211 (Compliance with any requirements of the Exchange made pursuant to the Rules);
- Rules 1400.5 and 1400.6 (Misleading acts, conduct and prohibited practices);
- and
- Rule 5000 (Obligation to settle).
LSE has decided not to impose a fine, taking into account the firm’s financial condition, but in other circumstances the Exchange would have sought a fine of £300,000.
The breaches to which the public censure relate arose from events which occurred between January 2020 and July 2020 in respect of Jub Capital’s failure to settle a series of sale transactions.
The transactions which Jub Capital failed to settle involved trades in the securities of a particular issuer and were entered into: (i) between January 2020 and February 2020, prior to a period of suspension of trading of the relevant security (for reasons unrelated to the events that are the subject of this censure) and (ii) during July 2020, after the relevant security had been restored to trading.
The failure to settle had a significant impact on Jub Capital’s counterparties, who were unable to settle trades that were dependent on the incoming delivery of the securities from Jub Capital. In some cases counterparties were required to obtain securities in the market at a higher price in order to then effect settlement of their own positions.
As a result of the firm’s actions, the Exchange suspended the membership of Jub Capital on 17 July 2020 and declared the firm a defaulter on 31 July 2020. On 11 August 2020 Jub Capital’s Exchange membership was terminated as the result of its default.
In reaching its decision to conclude this disciplinary action by way of a Consent Order, the Exchange has taken into account, amongst other matters:
- Jub Capital has taken steps to address the negative market impacts which resulted from the firm’s actions;
- Jub Capital attempted to mitigate some of its unsettled positions at the time through, albeit limited, attempts to acquire securities for settlement; and
- Jub Capital’s acknowledgement of the rule breaches and its co-operation in achieving settlement of the disciplinary action.
In light of this case, member firms are reminded that where a member firm fails to comply with its obligations under the Rules, the Exchange will take appropriate disciplinary action, including taking action, pursuant to Rule 1216, notwithstanding that a firm’s membership of the Exchange has terminated.