Circumstances surrounding the sudden departure of Paul Compton as chief executive of wealth manager and stockbroker
WH Ireland's own compliance office is reported to have raised concerns about Mr Compton's share dealings through what are known as Suspicious Transaction Reports (STRs). These STRs were forwarded to the FSA and are alleged to include the names of facilities management group Cape, and oil and gas group Rockhopper Exploration. The FSA is believed to have raised concerns about Mr Compton's share dealings with a previous employer, and the regulator is understood to have taken nearly nine months to approve his appointment at WH Ireland, considerably longer than usual.
When the news broke, shares in WH Ireland fell 32 per cent to 50.5p, and it subsequently became clear that Mr Compton had rapidly disposed of his entire holding in WH Ireland of around 1.2m shares, or 5 per cent of the share capital. But the only two really large transactions, one of 390,348 shares and the other of 415,348 didn't take place until early afternoon on the Friday when the shares changed hands at 53p. The suggestion is that someone bought these shares having received assurance from the company that the share price turmoil was related to Mr Compton and not the company itself.
Indeed, WH Ireland released a trading statement on Friday designed to highlight just that, pointing out that the group's underlying trading performance remains robust, with both the corporate broking side and the private wealth management business doing well. Group revenues in the year to 30 November grew to £25m, while assets under management were up to £1.6bn.
As a damage limitation exercise, the trading update seems to have been a qualified success because the shares have recouped around half the losses sustained last Thursday. The question now is whether the unfinished FSA involvement will act as a drag on the share price, even though the company itself looks to be trading well. In the absence of any further clarity, we are taking a neutral stance, and put the shares on a hold at 60p.