FSA bans and fines self employed trader GBP700,000 for market abuse
14th June 2011The Financial Services Authority (FSA) has obtained a court order preventing Barnett Michael Alexander, a self employed trader, from committing market abuse and ordering him to pay a GBP700,000 fine and GBP322,818 in restitution to firms which experienced a loss as a result of his actions.
The FSA has also banned Alexander from performing any function in relation to a regulated activity, and he has transferred to the firms a further GBP306,312 held in trading accounts controlled by him.
In the period 1 January 2009 to 25 May 2010 Alexander, an experienced trader and former private client stockbroker, was operating as a self-employed trader dealing in shares and retail derivative products such as contracts for differences (CFDs) and spread bets from his home address.
Alexander manipulated the prices of shares on the London Stock Exchange by entering multiple small orders to buy and sell shares. The purpose of these orders was to manipulate the price of CFDs and spread bets, which track the price of shares. Alexander generated GBP629,130 by trading CFDs and spread bets at the prices he created through his share price manipulation, and frequently used CFD and spread betting accounts in the names of third parties to disguise his behaviour. This manipulation of the prices of shares and derivatives at the expense of the firms amounts to market abuse.
In May 2010 the FSA obtained a temporary injunction from the High Court preventing Alexander from committing market abuse, and froze GBP1 million of his assets. This was the first FSA injunction preventing market abuse. The High Court has now made that order permanent and has ordered Alexander to pay the fine and restitution. The permanent injunction is the second the FSA has obtained against an individual for market abuse.
Tracey McDermott, the FSA's acting director of enforcement and financial crime, said:
"The FSA views market manipulation extremely seriously. Alexander's behaviour was deliberate and repeated over a significant period of time. He sought to conceal his trading and made substantial profits at the expense of the firms which allowed him to trade with them.
"The court action shows the FSA's determination to use all our powers to prevent market abuse and to pursue those who commit it."
The FSA has taken into account the fact that Alexander was a self employed trader, not working in the financial services industry, at the time of the misconduct and that he has fully admitted his market abuse. For these reasons the ban has been limited to a minimum term of five years.
Alexander agreed to settle at an early stage of the FSA's investigation and consented to the court order. He therefore qualifies for a 30% discount on his financial penalty (but not the requirement to make restitution). Were it not for this discount, the FSA would have asked the court to impose a financial penalty of GBP1,000,000 on Alexander.
