The Financial Services Authority (FSA) has made the first use of its powers to prosecute two individuals for insider dealing.
The Financial Services Authority (FSA) has made the first use of its powers to prosecute two individuals for insider dealing. The two defendants are accused of trading ahead of a proposed cash offer from Motorola Inc for the entire issued share capital of TTP Communications Plc. Both have pleaded not guilty to the charges brought under s 52 of the Criminal Justice Act 1993. Richard Burger, senior solicitor in the regulatory team of Mills and Reeve, says the prosecutions represent another stepchange in the FSA’s strategy to combat market conduct. “To allege that a professional, in this case a solicitor, has committed an act of market misconduct would push the sliding scale very closely towards the criminal standard, in which case you may as well commence criminal prosecutions,”he says. Burger adds that in the FSA’s only other market misconduct prosecution— FSA v Rigby and Bailey—a precedent had been set for harsh sentences for those that abuse the financial markets, and that the imposition of a sentence will provide a more effective deterrent than penalty fines.
