The regulator has fined Mark Lockwood, a former trading desk manager at a retail stockbroking firm, £20,000 for failing to observe proper standards of market conduct.
The FSA says Lockwood failed to identify and act on a suspicious client order that allowed the firm to be used to facilitate insider dealing. As a result of the regulatory failings Lockwood’s firm failed to identify the trade as suspicious and failed to report it to the FSA.
The client sold shares in oil and gas exploration company Amerisur on May 23 2007, ahead of an announcement by the company of a placing of shares the next day. The client has also been subject to separate FSA enforcement action for market abuse in relation to Amerisur shares.
Lockwood failed to identify that the transaction was being conducted on the basis of inside information, despite his own knowledge of the impending transaction and clear warning signals from the client. He failed to prevent the trade or alert his firm to the possibility that the trade was being conducted on the basis of inside information. The illegal trading only came to light because of a report submitted by another broker.
FSA director of enforcement division Margaret Cole says: “This fine emphasises the importance of the Suspicious Transaction Reporting regime.
“Tackling market abuse and insider dealing is not just an issue for the regulator. Broking firms are the front line of defence against people who seek to misuse and profit from their possession of privileged information.
“Lockwood’s failure could have meant that this incident went undetected and unpunished. Approved persons should be in no doubt as to their responsibilities in this area and the FSA will not hesitate to take action where they fall down on these.”