FSA wins market abuse case against Winterflood

22 April 2010 3:31 pm | By Nicole Blackmore

The appeal hearing follows an earlier finding of market abuse by the Financial Services and Markets Tribunal.

The decision by the Court of Appeal means that Winterflood, Sotiriou and Robins will now be required to pay their fines of £4m, £200,000 and £50,000 respectively.  

The Court of Appeal also ordered that Winterflood, Sotiriou and Robins pay the FSA’s costs of the appeal of £52,500.  

In June 2008, the FSA found that Winterflood and its traders had played a pivotal role in an illegal share ramping scheme relating to AIM listed company, Fundamental-E Investments Plc.  

In particular, the market maker had misused rollovers and delayed rollovers thereby creating a distortion in the market for FEI shares and misleading the market for about six months in 2004.

Winterflood made about £900,000 from trading in FEI shares, its single most profitable stock at the time.  

Winterflood, Sotiriou and Robins challenged the FSA’s finding at the Tribunal which, in March 2009, found that they had committed market abuse. They subsequently appealed the Tribunal’s decision at the Court of Appeal.  

FSA director of enforcement Margaret Cole says: “Winterflood allowed highly profitable trades to go ahead despite clear warnings that something was amiss. Their actions led to serious losses for investors and damaged market confidence. This was well below the standards expected of a leading market maker which is why they will be paying a substantial fine.  

“The importance of this case is underscored by Winterflood’s determination to challenge our finding of market abuse. We are pleased that both the Court of Appeal and the Tribunal agreed with our finding.”

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