Banks face curbs on "biased" pushing of City floats

Investment banks face a crackdown by the City watchdog on “biased” company research written to drum up interest in stock-market floats.

The Financial Conduct Authority today said that evidence suggested bankers put “significant pressure” on their analysts to write favourable research to win lucrative roles running initial public offerings.

The watchdog has proposed giving all City analysts access to management of a company heading for a float — rather than only those pitching to work on the float — to increase the amount of independent research.

“A well-functioning IPO market with high standards of conduct is an essential part of the UK’s capital markets,” the FCA’s Christopher Woolard said, adding that the proposals would “improve the range, and timeliness of higher quality information” for investors.

There was an enforcement action against 10 US broker-dealers in 2014 for research written on Toys R Us, who were found to have used their equity-research analysts to win investment-banking business.