A series of unusual share trades in a recently delisted Aim company are being scrutinised by the Financial Conduct Authority's (FCA) market abuse team, the IC has learned.
On 6 December, a sharp uptick in share trading of
That statement, arriving a week after Iluka appeared to back away from plans to acquire Sierra Rutile, caused shares in the Aim-listed firm to increase 24 per cent back up to the originally agreed takeover price. Following the acquisition, Sierra delisted from Aim before London's junior market opened on 7 December.
The acquisition had originally been scheduled to complete on 29 November, but stalled at the last minute after Iluka voiced concerns over seepage at Sierra Rutile’s tailings dams. Given the apparent threat posed to the deal, which had caused the share price to fall from 35p to as low as 27.5p, the trades on the morning of 6 December were unusual for both their size and volume.
For example, a greater number of trades were made in the four hours prior to the announcement than the four previous trading sessions combined. Two individual purchases of 100,000 shares, which according to Bloomberg transactional data completed at 9.20am and 12.14pm on 6 December, together accounted for more than the entire previous week's (from 29 November) volume.
Those trades are now being probed by the FCA, according to a person familiar with the situation. There is no suggestion of any wrongdoing on the part of Sierra Rutile, its brokers or Iluka, nor is there evidence that buyers and sellers involved in the trades acted on insider information.
One institutional shareholder in Sierra said Iluka’s initial decision to defer the deal had come as a shock and that there was no indication the acquirer would change its mind again prior to the statement on 6 December.
The FCA declined to comment, as did Investec, the broker and corporate adviser responsible for Sierra's regulatory and market disclosures. Reached for comment, an Iluka spokesperson said the firm "does not make any observations of trading in the shares of another company".
Last year, the FCA received 1,831 reports of suspicious transactions on the markets it regulates, an increase of more than 250 per cent in five years. The vast majority of reports throughout the period were related to the misuse of information.