Upper Tribunal confirms FCA’s market manipulation bans

ood documentation practices and adherence to regulations within the financial services industry. The recent decision by the Upper Tribunal to uphold the Financial Conduct Authority’s (FCA) ban on Diego Urra, Jorge Lopez Gonzalez, and Poojan Sheth sheds light on the consequences of market manipulation.

During the period from 1 June 2016 to 29 July 2016, the individuals in question, who were employed at Mizuho International Plc, were found to have engaged in market manipulation while trading Italian Government Bond futures (BTP futures). The FCA’s investigation revealed that the traders manipulated the market by placing large orders on one side of the order book to create a false impression of market demand or supply. This tactic allowed them to execute smaller, genuine orders on the opposite side of the book before canceling the larger orders.

The Upper Tribunal concurred with the FCA’s findings, stating that the traders’ actions were intended to deceive the market and benefit their own positions. It was determined that the conduct of Mr Urra, Mr Lopez, and Mr Sheth was dishonest and lacked integrity, which ultimately led to their prohibition from working in financial services. The Tribunal also noted that the explanations provided by the traders for their trading strategies were not credible, casting doubt on their intentions.

In terms of penalties, the Upper Tribunal followed the FCA’s framework but made adjustments based on individual circumstances. For instance, Mr Urra’s penalty was reduced from £395,500 to £223,400, taking into account only the relevant income from the 12-month period in question. Mr Sheth, although assessed at level 4 seriousness, received a reduced penalty of £57,600 due to his lower income compared to Mr Lopez. Mr Lopez, on the other hand, was fined £100,000, and all three traders were banned from engaging in regulated activities.

The case serves as a reminder of the importance of maintaining accurate records and following regulatory guidelines in financial trading practices. The FCA’s persistence in investigating and penalizing market abuse highlights the need for firms and individuals to demonstrate the legitimacy of their actions. It took over six years for the FCA to issue a decision notice in this case, emphasizing the thoroughness of regulatory oversight in the financial industry.

The recent publication of final notices by the FCA reaffirms the commitment to combatting market manipulation and upholding the integrity of financial markets. The decision to ban the traders involved in this case underscores the severity of engaging in dishonest practices that undermine market integrity. Moving forward, adherence to regulations and transparency in trading practices will be crucial to maintaining trust and confidence in the financial services sector.