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Winterflood appeals against £4m FSA fine

Winterflood Securities has challenged the FSA in the Court of Appeal over a £4m fine received from the regulator in 2008.

Winterflood was fined after two of its traders had “engaged in market abuse” following a share ramping scheme involving Fundamental-E Investments. The fine was levied on Winterflood for failing to notice warning signs or query particular trades in computer screen company FEI in 2004, a firm for which Winterflood was the marketmaker.

With no allegations that Winterflood deliberately committed an offence, the crux of the marketmakers argument, according to reports in the FT, is whether its failure to spot the share ramping can be considered abuse under the FSA’s Code of Market Conduct.

Charles Flint QC told the court that Winterflood accepted orders from SP Bell, a regional stockbroking firm headed by Simon Eagle. The firm was placed in administration in 2004 after it was found that a number of its customer’s accounts had been used to buy about £10m worth of shares from FEI.

Flint added that the FSA had found Eagle was involved in “a share ramping operation” and Winterflood was “not party to that illegitimate purpose”.

Winterflood argued that the FSA had a requirement to prove an “actuating purpose”, in the firm trying to mislead or distort the market.

The court reserved its judgment.

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. “The fine was levied on Winterflood for failing to notice warning signs or query particular trades…..”

    Hmmm. What about the fact that the FSA (for years) failed to notice (or deliberately took no notice of) warning signs or query particular trades being carried out by the banks? No fines or bonus clawbacks there, eh?

  2. In a country and a society that has lost its way we have a regulator that is above the law!

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