In its most recent publication, Primary Market Bulletin 62, published on 8 April 2026, the Financial Conduct Authority (“FCA”) flagged concerns regarding the direct targeting of UK micro-cap and small-cap issuers as part of potentially manipulative schemes designed to affect those issuers’ share prices. Specifically, the FCA has noted an increase in two types of schemes: fake investor takeover approaches and equity fundraisings linked to pump-and-dump schemes. This summary note considers the above in further detail and provides practical guidance for companies when conducting due diligence on potential takeover offers or equity fundraising proposals.
Reflecting its sustained supervisory focus on market manipulation and its broader 2025–2030 strategic priority of fighting financial crime, the FCA has used Bulletin 62 to set out its concerns regarding the direct targeting of UK micro-cap and small-cap issuers through manipulative schemes aimed at influencing share prices.
Bulletin 62 should not be read as a standalone concern – it forms part of an escalating pattern of regulatory scrutiny in this area, particularly where retail investors and smaller issuers may be more vulnerable to abusive practices.
Types of schemes identified by the FCA
Fake investor takeover approaches
The FCA has raised concerns in relation to schemes whereby parties pose as genuine investors seeking to make an offer for the entire share capital of an issuer – so-called “fake investor takeover approaches.”
- Mechanics: These schemes involve the parties either: (i) leaking news online regarding a takeover offer approach having been made; or (ii) pushing the issuer to disclose the approach to the market.
- Objective: To increase the company’s share price so that parties can generate profit from share price movements through market activity.
Equity fundraising linked to pump-and-dump schemes
The FCA has also identified concerns with ‘pump-and-dump’ schemes involving approaches to issuers relating to equity fundraising proposals involving the granting of a substantial number of warrants in conjunction with the raise.
- Mechanics: In the context of equity fundraisings, these schemes involve the granting of significant numbers of warrants and, following the grant, online advertising campaigns containing false or misleading information about the issuer being used to ‘pump’ the issuer’s share price. Once the share price has risen, the warrants would then be exercised and the resulting shares would be sold at the inflated share price (the ‘dump’). Following the dump, the share price would then likely fall, potentially leaving other investors with losses or a lower share price that at the outset.
- Objective: To generate profit by exercising warrants granted at the time of the fundraising at an inflated share price and selling the resulting shares before the price corrects.
Legal framework under MAR
The legal framework underpinning the FCA’s concerns is found in the EU Market Abuse Regulation (EU) 596/2014 (“MAR”), which now forms part of English law by virtue of the European Union (Withdrawal) Act 2018 (“UK MAR”). In particular:
- Article 12(1)(c) provides that market manipulation includes “disseminating information through the media, including the internet, or by any other means, which gives, or is likely to give, false or misleading signals as to… [the price of a financial instrument,] where the person who made the dissemination knew, or ought to have known, that the information was false or misleading.”
- Article 15 states that “a person shall not engage in or attempt to engage in market manipulation.”
- Recital 47 explains how disseminating false or misleading information, including “the invention of manifestly false information… the wilful omission of material facts… [and] the knowingly inaccurate reporting of information”, can harm both investors and issuers.
These provisions are directly relevant to fake takeover approaches and pump‑and‑dump activity, particularly where false or misleading information is disseminated online, including through social media.
Practical takeaways
When a quoted company receives an approach purporting to be a takeover offer or equity fundraising proposal, the following practical steps should be considered as part of robust due diligence:
- Verify the identity and credentials of the approaching parties – This may include requesting and independently verifying corporate documentation, identity documentation for key principals and evidence of the financial capacity to complete a transaction. The investors’ track record for comparable transactions should also be reviewed.
- Assess whether the approach is genuine considering share price movements – If an approach coincides with unexplained share price increases or unusual trading volumes in the company’s securities, this should be flagged to advisers and investigated.
- Scrutinise warrant-heavy fundraising structures – Where a proposal involves the granting of substantial numbers of warrants, examine the identity of the proposed warrant holders, carefully consider the terms on which the warrants may be exercised and how long the warrants may be held for, and whether the overall structure is consistent with a genuine fundraising or investment objective.
- Monitor for online activity and social media campaigns connected to the approach – This is particularly important where such activity appears designed to generate retail investor interest or relies on promotional content that may be misleading. The FCA has recently warned consumers against the use of AI-generated videos or deepfakes that are used to impersonate public figures or well-known personalities, which appear to endorse an investment and encourage investment.
Where there are concerns that the issuer may have become the target of manipulative activity, this should be discussed with the company’s advisers and reported to the FCA promptly. The FCA has indicated that it expects issuers and their advisers to identify and report potentially suspicious activities at source, meaning they will need to be both aware of these issues and vigilant with respect to any suspicious activities that may be occurring in relation to their securities.
For further information, please contact:
Fiona McFarlane, Partner, Bird & Bird
fiona.mcfarlane@twobirds.com
