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UK – Nestor fined over share dealings

15 February 2013

The Financial Services Authority (FSA) has fined Nestor Healthcare Group Limited £175,000 for failing to take adequate steps to ensure that its board members and senior executives complied with the share dealing provisions of the FSA’s Model Code. According to their website, Nestor are the largest specialist provider of domiciliary care in the UK, provide approximately 380,000 hours of care per week through their Primary Care and Care In The Home businesses.

In the period from 18 October 2006 to 30 June 2010, Nestor was listed on the Main Market of the London Stock Exchange. Throughout this time according to the FSA, “Nestor did not issue any reminders about its own share dealing rules …review them or identify that breaches of the Model Code had occurred. Nestor employed an informal approach to granting dealing approval and largely relied on the experience and knowledge of its directors to ensure that the appropriate compliance was met. This approach was inadequate and contributed to the company’s failings”.

Although the FSA does not allege that any of the dealings referred to in the Final Notice were based on inside information. According to The Times, the board of Nestor breached City share dealing rules while buying stock that went on to make gains of more than half a million pounds.

Nestor was bought by Acromas, owner of Saga and the Automobile Association, for £124 million in December 2010. Again according to The Times, Acromas said yesterday that it had "no idea" that Nestor had breached FSA rules. A spokesman said that Acromas will pay the FSA's £175,000 fine for the breach, the first levied by the regulator for a breach of its listing rules, "with a smile on our face, although our teeth are gritted". The Financial Times quotes a spokesman from Saga saying “This was related to people who are no long with the business. It was not on our watch, but we are left holding the baby and nursing the fine”.

Nestor agreed to settle at an early stage of the FSA's investigation and therefore qualified for a 30% discount on its financial penalty. Were it not for this discount, the FSA would have imposed a financial penalty of £250,000 on Nestor.


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