Michael Spencer under fire on timing of Icap shares sale

Nick Goodway
5 Feb 2010

Icap, London's biggest interdealer broker, was today forced to defend the firm's founder and chief executive Michael Spencer as its issued a shock profits warning weeks after he sold a huge share stake.

Icap shares fell 18% to 300p on the news and have dropped by a third in the last month.

Just three weeks ago, Spencer and his private family company sold £45 million worth of Icap shares at 440p each. Today that sale would have raised only £30 million.

Spencer is likely to be asked to explain his sale by regulators.

The company's shares had already fallen sharply this year ahead of today's warning — wiping £170 million off Spencer's remaining 17% stake.

Icap said profits for the year to March would now be between £295 million and £315 million, some £20 million less than it forecast in November.

Spencer said: “Our established businesses continue to perform well in these challenging markets, although some of our newer businesses are taking longer to achieve profitability. In the first weeks of 2010 overall activity levels rebounded, albeit at a slightly lower level than last year. Recently, regulatory uncertainty has increased and the regular seasonal pattern of market activity has been affected.”

Among the new businesses which are underperforming are equity trading and ship-broking where Icap has spent a fortune recruiting new traders.

Spencer is Treasurer of the Conservative Party, a close personal friend of leader David Cameron and has donated millions of pounds to the party.

This is not the first time he and his private company IPGL have run into problems over Icap shares. Two years ago he secretly pledged some of his and IPGL's Icap shares to guarantee loans to IPGL. Last year HSBC agreed a £200 million refinancing of IPGL also secured against Icap shares.

Spencer did not turn up at today's press conference for Icap's trading statement which was hosted by its chief operating officer Mark Yallop.

A spokesman for Icap denied that Spencer had done anything wrong. He pointed out that:
The share sale had been prompted by IPGL directors seeking to deleverage the business.

None of the senior management of Icap would have had its December figures, which is when the slowdown began, at the time Spencer sold.

The sale was outside the close season when company directors are not allowed to trade shares in their companies.

Spencer sought and was given the permission of the rest of Icap's board to sell.

The Financial Services Authority has a model code for directors' dealings which it expects all companies to follow. It refused to comment specifically on Icap or Spencer.