FCA issues final notice for PDMR breach of MAR

Introduction

The UK Financial Conduct Authority (FCA) issued a final notice against András Sebők on 26 November 2024, fining him £123,500 for breaches of certain share dealing provisions of the Market Abuse Regulation (596/2014) (MAR). Mr Sebők, a person discharging managerial responsibility (PDMR) at Wizz Air which has shares admitted to trading on the main market on the London Stock Exchange, conducted 115 trades in Wizz Air shares between April 2019 and November 2020. He did not seek permission to deal in the shares in accordance with Wizz Air’s share dealing code and was in breach of provisions of MAR. These provisions prohibit dealing by a PDMR during a closed period and require a company to notify share dealings by a PDMR to the market.

This is the first time the FCA has fined a PDMR for trading in shares during a closed period in breach of Article 19(11) of MAR and the second time the FCA has fined a PDMR for failing to disclose dealings under Article 19(1) of MAR (the first case was the final notice against Kevin Gorman in 2019).

Who is a PDMR?

Under Article 3(1)(25)(b) of MAR, a PDMR is a board member or a senior executive who has (i) regular access to inside information relating directly or indirectly to the issuer and (ii) the power to take managerial decisions affecting the future developments and business prospects of the issuer.

What does this mean in practice? In this case Mr Sebők was the Chief Supply Chain Officer at Wizz Air and was a member of Wizz Air’s “Leadership Team” of 12 people, which included the CEO, the CFO, the COO and the Chief of Staff. Although he was not a member of the Board of Directors, he regularly attended Board meetings and had access to draft financial results before they were made public. He attended monthly financial performance briefings which would typically include a review of quarterly performance. He also had access to confidential information on aircraft purchase and negotiation, general procurement activities, airport portfolio and financial performance. The FCA considered that the above indicated that he had regular access to inside information and that the facts led to the conclusion that he was a PDMR.

The FCA came to a similar conclusion in the Gorman case. Kevin Gorman was the managing director of the logistics division of Braemar Shipping Services. He was a member of the company’s Executive Committee but was not a board director. As a member of the Executive Committee he received group management accounts on a monthly basis and board-level confidential information was discussed at its meetings. The FCA concluded that he had or was likely to have inside information and on that basis considered that he was a PDMR.

In both instances, the company had decided that the individual was a PDMR and he had been notified of the fact and been provided with relevant information such as the share dealing code, emails etc.

Comment

Most importantly, the Gorman and Sebők decisions are salutary reminders for PDMRs that they must understand the consequences of being categorised as a PDMR, read all the literature that they are given by the company and follow the obligations set out both in MAR and the company’s share dealing code.

As can be seen from the cases above, the consequences of getting it wrong are very serious.

Whilst making no comment about the circumstances in these particular cases, it is important for companies to consider carefully whom they categorise as PDMRs. We do not think being a member of a senior committee necessarily makes you a PDMR even if you have regular access to inside information and, whilst it is important that everyone conducts themselves in compliance with MAR, an issuer should scrutinise an individual’s role before bestowing additional obligations and potential liabilities on one of the team.

Action points

Companies may wish to review their list of PDMRs to check that everyone on the list meets both parts of the test set out above, particularly the requirement to have the power to take managerial decisions affecting the future developments and business prospects of the issuer.

The FCA noted in both cases that the relevant individuals had not had any training as to PDMR obligations and training on this (as well as MAR more generally) might be helpful as a reminder. The FCA is increasingly commenting on the need for individuals in listed companies to have MAR training which is practical and examples based rather than theoretical academic training (see Primary Market Bulletin 52).