Financial Services and Markets Act

Former Broker Banned by FCA for Encouraging Market Abuse

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On November 14, the FCA published the final notice it has issued to Rahul Shah.  The FCA’s statement is that Mr. Shah encouraged another person to engage in behavior which, had Mr. Shah engaged in that same behavior, would amount to market abuse (insider dealing) as per section 118(2) of the Financial Services and Markets Act (FSMA).

Mr. Shah has been prohibited by an FCA order from performing any function in relation to any regulated activities carried on by any authorized or exempt persons or exempt professional firm.  In light of his financial position, no financial penalty was imposed on Mr. Shah.

The prohibition on Mr. Shah arises from the fact that he had agreed, while a broker, to be made an insider by a financial advisor acting on behalf of Vyke Communications plc.  Final notice.

Consultation on Draft Secondary Legislation to Regulate LIBOR

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On November 28, HM Treasury published a consultation paper on draft secondary legislation to regulate LIBOR and make its manipulation a criminal offence.

The draft Financial Services and Markets Act (Regulated Activities) (Amendment) Order 2013 proposes two new regulated activities:

  • providing information in relation to a regulated benchmark (currently LIBOR is the only proposed regulated benchmark, although there is provision to add others); and
  • administering a regulated benchmark.

A further draft order, relating to “misleading statements” specifies the investments, activities and benchmarks in relation to three new criminal offences dealing with making misleading statements and conducting misleading practices.  These offences will be created by draft amendments to the Financial Services Bill 2012-2013 and will result in the repeal of section 397 of the Financial Services and Markets Act 2000.

It is intended that the Financial Services Bill will receive royal assent before the end of 2012 and that the draft secondary legislation will be considered by Parliament in early 2013.  Comments on the consultation must be submitted before December 24.