Tribunal upholds £8m Swift Trade FSA fine

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The Upper Tribunal has upheld an FSA decision to fine Canadian trading platform Swift Trade £8m for market abuse.

The FSA announced the fine of Swift Trade in August 2011 for “layering”, a form of manipulative trading.

Between 1 January 2007 and 4 January 2008, the regulator says Swift’s trading caused a succession of small price movements in a wide range of individual shares on the London Stock Exchange from which the firm has made substantial profits. The regulator says that these profits are in excess of £1.75m.

Swift Trade referred the matter to the Upper Tribunal.

Swift Trade also obtained a High Court injunction on 9 June 2011 to restrain publication of the decision notice. That injunction concluded on 16 August 2011 following the Tribunal’s decision dated 2 August 2011 that rejected an application for prohibition of publication of the decision notice. On 26 August 2011, the High Court dismissed a further application for an interim injunction to restrain the FSA from publishing the decision notice.

On 13 December 2010, Swift Trade was voluntarily dissolved under Canadian law after changing its name to 7722656 Canada Inc and its remaining assets were transferred to a former holding company, BRMS Holdings Inc. Any creditor’s claims including fines levied by the FSA would be paid out of these funds.

The tribunal rejected Swift Trade’s appeal and concluded its managers knew their conduct was not legitimate and actively encouraged it.

FSA director of enforcement and financial crime Tracey McDermott says: “We are pleased that the Tribunal has upheld the FSA’s decision and accepted unreservedly the evidence from our witnesses and experts as to the nature and impact of the activity.

“This was a particularly cynical case where a business model was based on market abuse. The approach taken by Swift Trade was novel and complex, designed to allow them to benefit at the expense of other market users, and to make detection more difficult.”