Market Abuse

Building

Market integrity rests on the foundation of fair and transparent practices. However, the lure of quick profits can tempt some to manipulate the system, engaging in activities termed “market abuse” by the Financial Conduct Authority (FCA).

Understanding the Core:

Market abuse, as defined by the FCA, encompasses a range of behaviours that distort or manipulate the market, creating an unfair advantage for perpetrators and harming the interests of legitimate investors. It primarily comprises two main categories: insider dealing and market manipulation.

Insider Dealing:

Imagine possessing crucial, non-public information about a company that could significantly impact its share price. Using this knowledge to trade in that company’s shares before the information becomes public constitutes insider dealing. This practice exploits an unfair advantage, depriving other investors of access to the same information and undermining confidence in the market.

Market Manipulation:

This category encompasses a broader range of activities aimed at artificially influencing the price of an investment or creating a false or misleading impression of its supply or demand. Examples include spreading false rumours, engaging in wash trading (creating the illusion of activity through self-dealing), and placing large, non-genuine orders to move the price in a desired direction.

The Scope and Impact:

Market abuse poses a significant threat to the integrity and efficiency of financial markets. It erodes investor confidence, discourages fair competition, and can lead to substantial financial losses for unsuspecting individuals and institutions. The FCA, as the UK’s regulatory body, takes market abuse seriously, wielding a range of tools to deter and punish such activities.

Enforcement and Deterrence:

The FCA possesses a robust enforcement framework to combat market abuse. This includes conducting investigations, imposing financial penalties, and even pursuing criminal prosecutions in severe cases. In 2022 alone, the FCA concluded over 40 market abuse investigations, securing millions of pounds in fines. This commitment to enforcement serves as a strong deterrent, reminding market participants of the potential consequences of engaging in such misconduct.

Staying Compliant:

Navigating the complex world of financial markets can be challenging, and even unintentional actions can inadvertently breach regulations. Therefore, understanding and adhering to the FCA’s market abuse rules is crucial for individuals and entities involved in trading activities. Here are some key points to remember:

  • Be aware of the different forms of market abuse and their definitions.
  • Refrain from using any non-public information for trading purposes.
  • Avoid engaging in any activities that could artificially manipulate the market.
  • Implement robust internal controls and compliance procedures to monitor trading activity.
  • Seek professional advice if unsure about the implications of specific actions.

Beyond Regulations:

Market abuse not only breaches regulations but also erodes trust and confidence in the financial system. Recognising its ethical implications and upholding fair market practices go hand in hand with regulatory compliance. Ultimately, fostering a culture of integrity and ethical conduct within the financial industry is essential to upholding the trust of investors and ensuring the smooth functioning of markets.

Market abuse remains a persistent challenge, demanding constant vigilance from regulators and market participants alike. By understanding the different forms of abuse, its impact, and the FCA’s role in enforcement, individuals and entities can navigate the financial landscape with greater clarity and mitigate the risk of inadvertently breaching regulations.

How Richardson Lissack can help:

Our team includes experienced lawyers who have defended individuals under criminal and regulatory investigation by the FCA. In addition, our head of Financial Services Regulation was previously employed by the FCA enforcement division and advised on criminal and regulatory investigations.

Let’s work together

Contact Us

Related

Publications

Buildings

FCA Moves to Streamline Removal of Unused Permissions

The Financial Conduct Authority (FCA) in the UK is proactively enforcing the perimeter by urging firms to review and, if necessary, remove unused re...

Building

Reasons for Trading Letter and FCA’s Preliminary Review: Untangling the Regulatory Threads

The Financial Conduct Authority (FCA) recently issued a “Reasons for Trading Letter” and launched a “Preliminary Review of Trading&#...

Building

Cryptoasset firms must comply with FCA financial promotions regime

As of 8th October 2023, all cryptoasset firms marketing to UK consumers must comply with the Financial Conduct Authority’s (FCA) financial promo...

Building

Bank account closures and CIFAS markers

Transcript of The Which? Money Podcast featuring Tim Thomas. Speaker 1 Welcome to the Which? Money podcast. Your weekly hits of money, news and person...

Building

Understanding Regulatory Investigations

Regulatory investigations can be a daunting experience for businesses and individuals alike. The consequences of non-compliance can be severe, with fi...

tall building

S173 Compelled FSMA Interview: What You Need to Know

In the United Kingdom, the Financial Services and Markets Act 2000 (FSMA) regulates financial markets and services. As part of its enforcement powers,...

Credit Suisse

The takeover of Credit Suisse

The takeover of Credit Suisse by UBS has more than a flavour of the Lloyds Bank Group ‘shot-gun wedding’ with HBOS in 2009: one financial services...

2 buildings looking up at them

A guide to insider dealing

Insider dealing is a serious charge, one that comes with considerable consequences if an individual is found guilty. It’s a complex area of law whic...

2 buildings looking up at them

CIFAS Markers: Data subject access request (DSAR)

What is a Cifas marker? CIFAS stands for ‘Credit Industry Fraud Avoidance System‘, a not-for-profit fraud prevention membership organisation. It o...

2 buildings looking up at them

What you need to know about CIFAS markers

National Fraud Database CIFAS fraud markers are adverse judgements through which one institution, be it a bank, loan company or an insurer, for exampl...

2 buildings looking up at them

Tim Thomas quoted in Bloomberg in relation to the PCP v Barclays case

Following the release of the judgment in PCP and Barclays, one of our directors, Tim Thomas, spoke to Bloomberg about the potential repercussions for ...

2 buildings looking up at them

Financial Crimes Enforcement Network (FinCEN) leak: UHNWI’s – the wrong target?

The FinCEN leak will surprise no experienced lawyers advising UHNWIs (Ultra-High Net Worth Individuals) and their professional advisers.  The irony o...

2 buildings looking up at them

The FCA and cannabis: an unlikely pairing?

The recent announcement by the Financial Conduct Authority (FCA) of guidance for companies in the medicinal cannabis sector, thinking about listing on...

Furloughed Individual

Furlough fraud: what lies ahead?

Furlough fraud claims are on the rise.  Her Majesty’s Revenue & Customs (HMRC) together with whistleblowing organisations are reporting thousan...

arrow-downarrow-left-greyarrow-leftarrow-right-0c2535 arrow-right-ffffff arrow-right-greyarrow-rightbullet-icon-whitebullet-iconcloseicon-connecticon-cross-double icon-cross-right icon-email icon-nav-lefticon-nav-righticon-phoneicon-pinicon-reachlawyer-linkedin-icon nav-menu-arrow rl-logo-icon social_facebooksocial_googleplussocial_instagramsocial_linkedin_altsocial_linkedin_altsocial_pinterestlogo-twitter-glyph-32social_youtube