In 2022, the Financial Conduct Authority (FCA) fined Metro Bank £10m and its former CEO, Craig Donaldson, and former CFO, David Arden, for reporting the lender’s prudential position to the market in its quarterly financial statements.
This included the bank’s risk weighted assets (RWA), on which its regulatory capital requirements are based.
The lender was fined for publishing an unqualified statement of its RWA and the capital ratios based on it in October 2018. The regulator ruled that Metro Bank was aware of an error in its data but failed to inform the market.
The amended numbers were published in January the following year, leading to a 39% fall in the bank’s share price. In March of that year, the FCA and the Prudential Regulatory Authority (PRA) opened an investigation into the lender for assigning a lower risk weighting to its mortgage portfolio.
The FCA ruled that Donaldson and Arden were aware of the error and were involved in the decision to publish the incorrect information, while the PRA issued a £5.4m fine to Metro Bank. Donaldson and Arden were also fined £223,100 and £134,600 by the FCA respectively.
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Steve Smart, executive director of enforcement and market oversight at the FCA, said: “Investors make decisions based on information shared by listed companies. They must be able to trust it’s accurate. Mr Arden and Mr Donaldson allowed information they knew to be wrong to be published.”
Arden and Donaldson have 14 days to appeal the ruling.
