European Central Bank
SSM Regulation – ECB publishes guide on setting administrative pecuniary penalties – 2 March 2021
The European Central Bank (ECB) has published a guide on the method for setting administrative pecuniary penalties for regulatory breaches under Article 18(1) and (7) of the Regulation establishing the Single Supervisory Mechanism Regulation (1024/2013/EU) (SSM Regulation).
While the ECB enjoys a wide margin of discretion in determining the amount of the penalty appropriate in each case, under the SSM Regulation the penalties must be effective, proportionate and dissuasive and must not exceed the limits specified in the Regulation.
The guide clarifies that the ECB sets the level of a penalty by reference to the severity of the breach and, in order to ensure proportionality, to the size of the supervised entity. The severity of a breach is classified in one of five categories: minor, moderately severe, severe, very severe and extremely severe. Which category a breach falls into depends on a combination of two factors: the impact of the breach and the degree of misconduct.
ECB guide to the method of setting administrative pecuniary penalties
Press release
Financial Conduct Authority
Market abuse – FCA fines and bans former trader – 4 March 2021
The FCA has published a final notice addressed to Adrian Geoffrey Horn, a former market making trader at Stifel Nicolaus Europe Ltd. Mr Horn has been fined £52,000 and banned from performing any function relating to any regulated financial activity after engaging in a practice known as ‘wash trading’.
The FCA found that Mr Horn had engaged in market abuse by executing trades with himself in the shares of McKay Securities plc (a corporate client of Stifel). Mr Horn’s motivation for doing so was to ensure that a minimum number of shares were traded in McKay each day, which he believed was a requirement to ensure that McKay remained in the FTSE All Share Index. The FCA found that this conduct amounted to market manipulation, and gave false and misleading signals to the market as to demand for and supply of McKay shares.
Final notice
FCA press release on actions taken against Adrian Geoffrey Horn
Recent Cases
R (T and another) v Financial Conduct Authority [2021] EWHC 396 (Admin), 24 February 2021
Judicial review, FCA Regulatory Decisions Committee, international dividend arbitrage trading schemes
In R (T and another) v Financial Conduct Authority, the claimants issued a judicial review to challenge a decision by the FCA’s Regulatory Decisions Committee (RDC) not to stay the regulatory proceedings against the first claimant.
The FCA is currently progressing enforcement cases relating to international dividend arbitrage trading schemes, and the first of the two claimants in the judicial review is subject to such enforcement proceedings. The claimants wanted to stay the RDC proceedings pending the outcome of civil proceedings in the Commercial Court brought by the Danish Customs and Tax Administration, Skatteforvaltningen (SKAT), against various defendants, including the second claimant in the judicial review.
The first claimant is not a party to the SKAT claims. However part of SKAT’s case against the second claimant is that the ‘knowledge, acts and intentions’ of the first claimant should be attributed to the second claimant as the first claimant was the sole shareholder in and director of the second claimant.
Swift J held that the risk of serious prejudice to the first claimant without a stay of the RDC proceedings outweighs other public interest considerations as they arise in the circumstances of the case. Therefore the RCD proceedings should be stayed pending the judgment of the Commercial Court on certain preliminary issues (scheduled for between October and December 2021). The FCA’s request for permission to appeal was refused, so they are seeking permission from the Court of Appeal.
R (T and another) v Financial Conduct Authority [2021] EWHC 396 (Admin)
