The UK Financial Services Authority (FSA) has imposed a fine of 30m against companies of the Prudential Group (Prudential) for failing to inform the market regulator at the time of its proposed acquisition of AIA, the Asian subsidiary of AIG.
The UK market regulatory agency said that Prudential group chief executive Tidjane Thiam played an important role, with others, in the decision not to contact the FSA about the proposed acquisition.
According to the agency, Prudential failed to deal with it in an open and cooperative manner when it was seeking to acquire AIA in early 2010, because it did not inform the agency of the proposed acquisition until after it had been leaked to the media on 27 February 2010.
Prudential should have informed the regulators in an open and cooperative manner so that the FSA could determine whether to approve or reject the deal on regulatory grounds.
FSA enforcement and financial crime director Tracey McDermott said that it is vital for companies to give due consideration to their regulatory obligations at all times.
"In particular, timely and proactive communication with the FSA is of fundamental importance to the functioning of the regulatory system and the integrity of the market," McDermott added.
When a meeting was held on 12 February 2010 between the FSA and Prudential executives, again the company failed to reveal the proposed transaction.
FSA said, "The proposed transaction's size and scale would have transformed the Group's financial position, strategy and risk profile and involved a planned rights issue of 14.5bn, which would have been the biggest ever in the UK."
The market regulatory agency further said that it had a regulatory accountability to conduct an intensive, detailed and thorough scrutiny of the proposed transaction.
