A round-up of recent enforcement actions and investigations in the financial services sector.
This month in summary:
In the FCA’s first market abuse outcome under the EU Market Abuse Regulation, Corrado Abbattista, partner and Chief Investment Officer at Fenician Capital Management LLP, has been fined £100,000 and prohibited from taking part in any regulated activity as punishment for market abuse, as set out by the FCA in its Decision Notice.
The FCA has concluded that Mr. Abbattista constantly placed large misleading orders in the market for Contract for Differences (CFDs) between January and May 2017. The FCA believe that Mr Abbattista did not intend to execute any of the CFDs.
By adopting this approach, the FCA considers that Mr Abbattista falsely represented an intention to buy and sell in the market when there was no intention to do so. The volume of shares Mr Abbattista allegedly falsely claimed to have an intention to sell were of a large quantity, which the FCA believes would have also misled other market users as to the supply and demand for the shares in question.
Mr Abbatista has referred the Decision Notice to the Upper Tribunal. The Upper Tribunal will determine whether the FCA’s Decision Notice was appropriate, and determine the changes, if any, that are required to the sanctions. The FCA will publish the Tribunal’s decision once available.
The Information Commissioner’s Office (ICO) has fined Swansea based CPS Advisory Ltd £130,000 for making over 100,000 unauthorised direct marketing calls regarding pensions.
This fine was brought under a change to the Privacy and Electronic Communications Regulation (PECR), which covers marketing calls, phone and texts, made in 2019. This change in the law limited who is authorised to call people about their pensions, and was implemented to prevent individuals being scammed, which has become an increasing problem in the pensions sector.
Under the new law, a company is allowed to make live calls to individuals about their occupational or personal pensions if:
The ICO found that CPS Advisory Ltd was not authorised by the FCA, or a trustee or manager of a pensions scheme. They could not provide valid evidence to show that consent had been obtained, and were therefore fined.
The FCA has published a Final Notice in respect of Conor Foley, former CEO of Worldspreads Limited and its holding company, Worldspreads Group plc, publicly censuring him for participating in market abuse. The Final Notice also bans Mr. Foley from performing any roles linked to regulated activity in the future.
The FCA had previously published a Decision Notice in July this year, which imposed a fine of £658,900 on Mr Foley. The FCA dropped their intention to fine Mr. Foley following his representations and provision of evidence in relation to his financial hardship. He has subsequently withdrawn a reference to the Upper Tribunal to challenge the FCA’s Decision Notice.
The FCA found that Mr Foley was involved in the drafting of admission documentation in relation to WorldSpreads’ previous AIM flotation in August 2007. The documentation omitted key information in regard to executives making significant loans to WorldSpreads and its subsidiaries as well as neglecting to refer to an internal hedging strategy. This misled investors and deliberately manipulated the market.
The FCA has decided to close half of its criminal investigations into breaches of anti-money laundering regulations (AML), despite having no convictions to date and a previous pledge to make use of its powers in the future.
Seven out of fourteen AML “single track” criminal investigations had recently been shut down. Consequently out of the seven still ongoing, only one “single track” investigation remains with the other six “dual track” cases proceeding with civil and criminal tracks.
To date, the FCA has only ever imposed fines for breaches of the AML, such as a £102m fine on Standard Chartered Bank for beaching the rules in retail and investment bank operations.
This decision to close cases has highlighted some ambiguity on the extent of the AML’s practical application. A prosecution by the FCA would help provide transparency to firms and businesses as to what conduct could land them in a criminal court in the future. This decision also likely reflects the rising costs and time required to complete an AML investigation, deterring the FCA from continuing to open cases at its former scale.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions.
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