FSA Enforcement Conference 2010

Margaret Cole emphasised the FSA’s strong and continuing commitment to their aim of credible deterrence, which she described as meaning ‘having an enforcement team who are seen as a force to be reckoned with’. She backed up her emphasis with multiple references to past and present penalties, criminal prosecutions and actions against individuals. ‘We are showing that the FSA has teeth – and we know that those teeth have to stay sharp.’

Last October the FSA’s Financial Crime & Intelligence Division merged with the Enforcement Division to create a stronger division with a dedicated intelligence function. Cole made a focus on the progress this division had made on areas of market misconduct and insider dealing.

In May the FSA became a designated prosecutor under SOCPA 2005 – a power which it has already used (see the article on Mr Ahmad on page 4 of this Regulatory Roundup). The FSA ‘have a trip to the Supreme Court coming up in July on the question of whether we have the legal power to add charges of money laundering alongside charges of insider dealing’. Cole said the FSA are currently prosecuting 12 individuals in four insider dealing cases (the link on the ‘Directed trades’ article to the FSA notice lists 11 of these), having secured five sentences of imprisonment for insider dealing previously.

Since April the FSA has made record fines against firms and individuals totalling £50m. In March the FSA introduced a new penalty setting policy relating the penalties closely to the advantage gained from the misconduct. In May the FSA made their largest fine ever against JP Morgan of over £33m over client money failings. May also saw the FSA’s highest ever fine on an individual – £2.8m on Simon Eagle for share ramping. Recent months saw fines of over £7m on five firms for transaction reporting failures.

Margaret Cole said it was ‘vital that the momentum of enforcement activity is kept during the transition to the Consumer Protection and Markets Authority (CPMA). In my view it’s also essential that the new authority maintains a strong and respected enforcement division.’

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