October 22, 2014

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October 22, 2014

October 21, 2014

October 20, 2014

UK Appeal Tribunal Confirms £8 Million Market Manipulation Fine

On January 28, the Upper Tribunal (Tax and Chancery Chamber) upheld the decision of the Regulatory Decisions Committee (RDC) of the UK Financial Services Authority (FSA) to impose a fine of £8 million (approximately $12.6 million) on Swift Trade Inc. (Swift Trade), a Canadian company that is not FSA authorized or regulated, for market abuse in the form of “layering.” The RDC decision was reported in the September 16, 2011, edition of Corporate and Financial Weekly Digest.

The Upper Tribunal found that between January 1, 2007 and January 4, 2008, Swift Trade systematically engaged in deliberate market abuse in the form of layering of numerous individual shares on the London Stock Exchange (LSE). The manipulative trading caused a succession of small price movements in the LSE shares and Swift Trade made substantial profits. The abuse was widespread and repeated on many occasions and involved tens of thousands of trading orders by many individual traders, sometimes acting in concert with each other across many locations worldwide. The trading led to a false or misleading impression of supply and demand and artificial market prices in the LSE shares, which was to the detriment of other market participants.

The Upper Tribunal concluded that “the conduct of which Swift Trade was guilty amounted to a cynical course of intensive manipulation of the LSE … carried out over a period of a little over a year, that attempts were made to conceal it, and that, far from demonstrating remorse, those controlling Swift Trade have done everything possible to escape the consequences of their actions. Of its kind, it is as serious a case as might be imagined, and there is nothing which could possibly be said by way of mitigation.”

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©2014 Katten Muchin Rosenman LLP

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About this Author

Partner

Edward Black, a partner in Katten Muchin Rosenman UK LLP, has a wide range of funds and financial services experience. He has acted for securities, commodities and derivatives brokers and dealers, banks, investment banks and investment managers for over 20 years. This has led to substantial involvement in commercial and transactional work in the financial services field as well as extensive regulatory expertise, and to significant experience with employment law matters.

+44 2 20 7776 7624
Tim Aron, Katten Muchin Law Firm, Finance Attorney
Partner

Tim Aron, a partner in Katten Muchin Rosenman UK LLP, specialises in the regulation of financial services firms, clearing houses and trading platforms. He advises on a wide range of regulatory matters including securities and derivatives transactions, safe-keeping of money and assets, systems and controls and other high level standards, conduct of business rules, and the restructuring, acquisition and disposal of entities in the financial sector.

+44.0.20.7776.7627