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FCA seeks to fine and ban CEO for market abuse

    

The Financial Conduct Authority (FCA) has published this week a decision note about the CEO of Worldspreads (WSL), Conor Foley. The FCA is seeking to fine Mr Foley for market abuse and ban him from working on regulated activities. The decision note was published on July 7 but follow an investigation that started in 2012. The FCA accuses the executive of committing market abuse by disseminating false information and manipulate transactions.

According to the FCA, Mr Foley was involved in drafting admission documentation ahead of Worldspreads parent company, WorldSpreads Group plc’s flotation on the Alternative Investment Market of the London Stock Exchange in 2007. The regulator considers that these documents contained misleading information and omitted key information. The FCA found that Mr Foley failed to declare internal loans and the internal hedging, which was not disclosed in the annual accounts until at least 2009.

The FCA argues that investors should have the omitted information to make an informed decision about the company and Mr Foley actions deliberately misled the market.

The FCA found a number of spread-betting between January 2010 and March 2012, including:

  • large spread bets on WSG’s shares on the trading accounts of WSL clients on terms which made statements in WSG’s annual accounts as to its credit policy false and misleading; and
  • large spread bets on two clients’ accounts by Mr Foley without their knowledge, according to the FCA, it had the intention to give the appearance of greater demand for WSG shares than in fact existed.

Other 2 executives of WSL were fined and banned in 2017 for falsifying critical financial information concerning WSL’s client liabilities and its cash position. This investigation started following WSL collapse in 2011.

For full decision note, please visit the UK FCA website.

In order to comply with the UK FCA and its Market Abuse Regulation (MAR), firms are required to have strong controls and a prepared team to  manage conduct risk and reduce the risk of market abuse. The compliance department must understand the importance of an effective risk assessment to detect and act on suspicious behaviour.

According to the Market Abuse Regulation companies must electronically maintain and keep records, such as lists of insiders for five years, and be prepared to supply such lists to regulators upon request. Regulators are aware that many companies use outdated and manual processes to keep these information. Firms that automate the manual process can reduce human-error and make selective insider information sharing much easier. With MyComplianceOffice Insider & MNPI Management tool your firm can effectively manage the risks of misconduct.

If you want to know more about the topic, MyComplianceOffice recently hosted a webinar with Gowling WLG, that covers the FCA expectations and crucial aspects of Conduct Risk and Market Abuse mitigation. This webcast includes current enforcement trends and the heightened risks of market abuse arising from remote working. If you have any question, please reach out to us.

Watch the Webcast!