Awake and alert to market abuse

Timon Molloy, Editor

“We’re conscious that with the anniversary of N2 fast approaching there’s been a lack of headline market abuse cases in the last year,” Therese Chambers, manager in the Market Integrity Group of the FSA’s Enforcement Division, told delegates to the Securities Institute’s Market Abuse and Insider Dealing Legislation Forum last month. She went on to echo Martyn Hopper, Head of the Market Integrity Group’s (MIG) comments, which we reported in the last issue, about the regulator’s need to choose cases carefully. There are 35 people in MIG (out of a total FSA enforcement complement of around 180) who are responsible for criminal prosecution of insider dealing offences, policing the civil market abuse regime and disciplinary sanctions for breaches of the Listing Rules and Principles. Constrained resources had led to the creation of a number of “priority work-streams” said Ms Chambers. “Insider dealing is a significant issue,” she noted, with a focus on suspected persistent offenders whom “we expect it will take years rather than months to deal with.” On the “flipside of the same coin”, problems arise over disclosure of price sensitive information (PSI). In a world of perfect Chinese Walls, dissemination would always be timely but in practice it may be “late, selective or inaccurate”. Poor internal controls in some corporates lead too many people to have access to PSI while others sit on it too long, both circumstances invite leaks. The FSA will often adopt a twin approach to the “coin”, and an insider dealing investigation will look both at trading patterns of those who deal on the basis of PSI and the behaviour of issuers that are its source.