Cenkos Securities may face £700,000 penalty
Cenkos Securities may face a fine of £700,000 ($919,000) from the Financial Conduct Authority (FCA) over its relationship with Quindell. Cenkos's penalty regards its supervision of the scandal-hit insurance technology group as it moved its listing to the London Stock Exchange. The settlement, which is currently being negotiated between Cenkos and the FCA, is expected to be made public in the next few weeks.

One of the City's most ‎prominent stockbrokers is facing a fine of hundreds of thousands of pounds over its relationship with a scandal-hit insurance technology group.

Sky News has learnt that the Financial Conduct Authority (FCA) has told Cenkos Securities (LSE: CNKS.L - news) that the firm may be hit with a penalty of roughly £700,000 because of failings in its stewardship of Quindell (Berlin: 30382595.BE - news) , a listed company.

Cenkos and the FCA are understood to be in discussions about the ‎penalty, but sources said it was possible that it might not be made public for several weeks.

Under the regulator's enforcement sanctions regime, ‎firms are entitled to a discount for settling early in the proceedings, implying that a fine imposed on Cenkos could ultimately be lower.

Quindell‎, which is now called Watchstone Group (Xetra: A1142B - news) , endured a torrid couple of years during which questions were raised over its accounting practices, its founder was ousted and it amassed losses far outstripping its market capitalisation.

Sources familiar with the regulator's investigation into Cenkos said it concerned the supervision of Quindell‎ during a period in which it planned to move its listing from London's junior AIM market to the main bourse.

Cenkos has been one of the City's most successful broking firms over the last decade, helping clients to raise billions of pounds through flotations and to finance takeover deals.

Last year, it made just under £20m in pre-tax profit, and it has returned more than £100m to shareholders since it listed on AIM a decade ago.

Watchstone, which processes insurance claims, has attempted to reinvent itself under a new name, with Quindell's former legal services division sold to Slater & Gordon, an Australian company.

Last December, Cenkos issued a statement to the stock market denying a report that it was under investigation by the Serious Fraud Office.

Quindell has been the subject of an SFO probe since last August, with the accountancy regulator also investigating.

The status of those inquiries is unclear.

The FCA halted its broader investigation into Quindell when the SFO‎ began examining the company, but has continued to explore whether Cenkos's conduct fell short of the required standards.

Cenkos and the FCA declined to comment.