There are three themes to be gleaned from the steady stream of market abuse cases being brought by the UK Financial Services Authority, said the Acting Enforcement Director Tracey McDermott. The first theme is the role of professionals in stamping out misconduct in the markets. In one case, the FSA not only took action against the person who directed the trading, but also against the compliance officer who failed to recognize the risk that inside information had been disclosed, the person who had improperly disclosed information, and the person who failed to recognize and report the trading as suspicious. Any one of those individuals could, by acting properly and complying with their regulatory obligations, have done something about the abuse, emphasized the Director, and none of them did so. All of them ultimately paid a price for that inaction.
A second theme concerns people who are not setting out to break the rules. Indeed they sometimes are attempting, albeit ineptly, to stay within the letter rather than the spirit of the law. An example of this is in the case of a trader at Credit Suisse who was given confidential information which he knew he should not disclose. So instead he decided to try and give a client a hint by engaging in a bizarre guessing game the end result of which was that he disclosed confidential information and was hit with a £210,000 penalty.
A third theme is that several enforcement actions have applied the new penalties policy, which the FSA introduced in March 2010. The changes to the penalties framework gave the FSA a minimum starting point of £100,000 for individuals who commit serious market abuse. The first fine under the new penalties system was imposed on a person who was fined £1m for market manipulation. This was followed by the FSA’s largest penalty on an individual to date on an investor based in
, who manipulated the closing price of
shares traded on the LSE. He was fined
$6.5m and ordered to pay $3.1m in restitution the counterparty who had lost out
as a result of his abuse. Dubai