The Tribunal tackles market abuse

In our June issue, columnist Adam Samuel looked at the FSA’s publication of decision notices now permitted by section 13 of the Financial Services Act 2010 and proposals to extend this to warning notices. During August, both the Administrative Court and the Upper Tribunal issued important, if apparently conflicting, judgments on the change and a market abuse decision notice. Adam reviews the decisions.

Adam Samuel BA LLM DipPFS MCISI Barrister Attorney may be contacted at AdamSamuel@aol.com. His book, ‘Complaints and Compensation: a Guide to the Financial Services Market’, is available from his website, www.adamsamuel.com.

The Upper Tribunal’s August output focused entirely on market abuse, with two decisions on almost completely different aspects of the subject. The second case chronologically, 7722656 Canada Inc, involved the despairing efforts of the applicants, a company and its prime mover Peter Beck, to avoid the publication of an FSA decision notice accusing them of “systematically and deliberately” layering, generating a string of small price movements in a wide variety of London Stock Exchange listed individual shares. Visser is a case on the risk to markets and wholesale investors posed by fund managers desperate to hang on to money invested in the hedge funds that they are managing. Its importance lies in reminding everyone that in the wholesale arena, the obligation not to mislead may amount to the same thing as ‘clear, fair and not misleading’. Perhaps more worryingly for the FSA, the Tribunal seemed to be laying down a presumption that applicants to it should not have their penalties increased unless the FSA has clearly misdirected itself.