Release Date: 12th August 2015
To access the original FCA document, click here.
Summary
The FCA has secured a High Court judgement awarding permanent injunctions and penalties totalling £7,570,000 against Da Vinci Invest Ltd, Mineworld Ltd, Szabolcs Banya, Gyorgy Szabolcs Brad, and Tamas Pornye for committing market abuse. The defendants engaged in a manipulative trading strategy known as “layering” involving 186 UK-listed shares. This strategy created false or misleading impressions of supply and demand, enabling the defendants to trade at artificial prices, which significantly undermined market integrity.
The FCA intervened in July 2011, securing an interim injunction to halt the abuse and freeze the assets of the implicated companies. The court found that between August 2010 and July 2011, the defendants used a sophisticated form of market manipulation to profit illicitly from price movements. This is the first instance where the FCA has requested the High Court to impose permanent injunctions and penalties for market abuse.
The defendants used large and small orders to manipulate share prices on the London Stock Exchange (LSE) and other trading platforms, creating an illusion of supply and demand. These actions allowed them to buy shares at lower prices and sell at higher prices, exploiting the market.
Key Takeaways for Other Firms:
- Ensure Market Integrity: Maintain robust systems to detect and prevent market manipulation practices like layering.
- Vigilant Monitoring: Regularly monitor trading activities to identify and address any potential abusive strategies promptly.
- Cooperate with Regulators: Provide full cooperation with regulatory investigations to demonstrate transparency and commitment to market integrity.
- Educate and Train Staff: Ensure that all employees understand the importance of fair trading practices and the severe consequences of market abuse.
- Implement Strong Controls: Develop and enforce strong internal controls to prevent unauthorised and manipulative trading activities.
By following these principles, firms can uphold market integrity, avoid significant penalties, and contribute to the fair functioning of financial markets.
Back to the Dear CEO letter archives.