Advice On Insider Dealing & FCA Investigations
John Veale of Kangs Solicitors considers further the powers available to the Financial Conduct Authority (FCA) when investigating insider dealing and market manipulation.
Functions of the FCA
The FCA:
- Work closely with the financial services industry to seek out and prevent market manipulation/insider dealing.
- Has wide powers of investigation and undertakes surveillance of markets using systems reporting data, order book data, benchmark submissions and other market data
- Examines market algorithms in order to detect suspicious trading
- Examines suspicious transactions that are reported to it and which may lead to the start of a formal
The Financial Services Act 2012 (‘the Act’)
In addition to the Criminal Justice Act 1993, which deals specifically with insider dealing, the Act sets out further offences dealing with market manipulation:
Section 89
Misleading Statements:
- When a person makes a statement that they know to be false or misleading or are reckless as to whether it is false or misleading in a material respect or dishonestly conceals any material facts whether in connection with the statement made or otherwise, then an offence is committed if that person does so with intention of inducing another or is reckless as to whether another is induced to enter into or refrain from entering into a relevant agreement or to exercise or refrain from exercising any rights conferred by a relevant investment
Section 90
Misleading Impressions:
- When a person does any act or engages in a course of conduct which creates a false or misleading impression as to the market in or the price or value of any relevant investment intending to create that impression and by doing so induces another to acquire, dispose of, subscribe for or underwrite the investment or to refrain from doing so or to exercise or refrain from exercising any rights conferred by the investment then an offence is committed if that person knows it to be so or is reckless as to whether it is and doing so is likely to produce a gain for themselves, a loss to another or a likely loss to another
Section 91
Misleading Statements etc. in relation to benchmarks:
- A person who makes a false or misleading statement in the course of arrangements for the setting of a relevant benchmark, intends that another should use the statement for the purpose of the setting of a relevant benchmark and knows the statement to be misleading or false or is reckless as to whether it is, commits an offence if they create a false impression as to the price or value of any investment or interest rate appropriate to a transaction
Penalties
Section 92 of the Act provides that the penalties are:
- On summary conviction, a fine not exceeding the statutory maximum and or a term of imprisonment not exceeding twelve months
- On conviction on indictment, a fine and or a term of imprisonment not exceeding seven years
Defences
There may be a defence available where a statement or impression is made
in conformity with:
- Price stabilising rules,
- Control of formation rules
- Regulations for buy-back programs and stabilisation of financial instruments
How Can We Help?
Kangs provides an expert team of solicitors experienced in FCA and financial investigations of every nature from the outset through to trial. If you need assistance our team would be happy to assist, call us using the contact details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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