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FCA bans investment consultant for market abuse

The Financial Conduct Authority has banned former investment consultant Rahul Shah for market abuse.

The regulator says it would also have imposed a fine of £125,000 if it was not for Shah’s financial position. It says imposing the fine would have caused him serious financial hardship.

The FCA says Shah deliberately encouraged another individual to purchase shares in Vyke Communications while in possession of inside information relating to the company.

It says he demonstrated a serious lack of honesty and integrity, and has therefore banned him from performing any function in relation to any regulated activity on the grounds that he is not a fit and proper person.

Shah had been given inside information about Vyke, concerning a joint venture it was set to enter into, on two separate occasions, on 16 and 30 June 2010.

Shah encouraged another individual to purchase shares after receiving the information, by telling them that a broker acting for Vyke recommended purchasing shares in the company.

He had contractual agreements which meant he stood to receive 40 per cent of any profit made from the purchase of Vyke shares.

FCA director of enforcement and financial crime Tracey McDermott says: “Confidence in markets depends on investors knowing they are operating on a level playing field. Inside information is a valuable commodity and must be treated as such.

“Exploiting that information whether to make investment decisions or to encourage others to do so gives an unfair advantage. Where this happens we will take firm action.”

Shah had referred his case to the Upper Tribunal, but withdrew his reference on 5 November 2013.


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