FSA fails to show teeth

Regulatory law
A senior criminal barrister has criticised the Financial Services Authority’s (FSA’s) failure to prosecute criminal offences within the sector.

Amanda Pinto QC, a tenant at 5 Paper Buildings and co-author of Corporate Criminal Liability, questions why the authority has chosen to deal with substantial offences, such as fraud and misleading conduct, as breaches of regulations rather than crimes. “These cases could be prosecuted in the criminal courts, yet the FSA chooses to deal with them as if they were simply regulatory infringements,” she says.

Responding to Pinto’s claims, Steven Francis, a former manager in the enforcement division of the FSA and now a partner at Reynolds Porter Chamberlain LLP, says that if the FSA takes the view that a court is unlikely to impose a custodial sentence, the appeal of pursuing the criminal route is much diminished.

“I can easily see a scenario where the FSA involves itself in a lengthy document-hungry insider dealing case and loses,” he says. “It would then expose itself to the criticism that it should have gone down the market abuse route: it’s so much quicker, cheaper and less risky!’”

Francis adds that the FSA might be tapping into the belief that there is little place in the criminal law in prohibitions where, for most people, the element of genuine stigma is “vanishingly small”.