Compliance consultant Adam Samuel has accused the FSA of “over-fining” following analysis showing the Upper Tribunal significantly reduced or overruled at least seven enforcement cases since January 2010.
Speaking at the FSA’s enforcement conference in London this month, acting director of enforcement and financial crime Tracey McDermott claimed that since January 2010, the FSA has only lost one enforcement case that was referred to the Upper Tribunal.
However analysis of Tribunal decisions published since the start of 2010 shows there have been at least seven cases referred to the Tribunal where either the case was lost outright or bans or penalties were removed or reduced.
In one case, the FSA sought to fine Dresdner Kleinwort trader Jason Geddis £25,000 and ban him from the industry for engaging in market abuse. In August, the Tribunal ruled a censure was more appropriate than a fine or ban and that the FSA had “misjudged the facts of the case”.
In another case, the regulator proposed a fine of £100,000 against Graham Betton for his role in a share-ramping exercise devised by his employer SP Bell. In May 2011, the Tribunal ruled Betton took part in the scheme over fears he would lose his job rather than greed and reduced the fine to £25,000.
Compliance consultant Adam Samuel says: “The FSA has not only been over-fining but seems not to have a basis for fines it can defend at Tribunal.
“Judging fines is not an easy science, however, the string of cases in recent years in which the Tribunal has reduced fines would at least suggest the FSA ought to think internally about why this is happening.”
The FSA declined to comment.