This new focus is the legacy of the HBOS debacle that happened in March this year. Shares in the bank plummeted 17% in a single day as rumours swirled around the City that it had serious financial problems.
There was speculation that the sharp drop in the share price was the result of unscrupulous traders spreading false rumours so they could then shorting the falling stock. The FSA promised to come down hard on the perpetrators under the Market Abuse Directive, but was finally forced to drop the investigation due to lack of evidence.
Paul Glass, associate in law firm Taylor Wessing’s commercial disputes group, said the FSA has been more proactive about working with the police to clamp down on market abuse, although it does not itself have powers of arrest.
“The well-publicised arrest of eight individuals in July in a series of "dawn raids" by the FSA (involving some 40 FSA employees), assisted by the City of London Police, is an example of its ability to request police assistance."
“The FSA has, prior to 2008, rarely made use of its ability to request the police arrest those involved in investigations, but it does appear to be looking to bring criminal prosecutions more often (three this year to date) in relation to market abuse,” he says.
Glass believes the FSA is toughening its stance in response to criticism in recent years that it is not doing enough to deter such activity. He expects to see more prosecutions being brought by the regulator in future.
Carlos Conceicao is former head of department within the FSA’s enforcement division that investigates insider dealing. He now works for law firm Clifford Chance. He said the FSA’s power to compel evidence and push for prosecution is not a new thing – it has been in force since 2000.
“The FSA has, prior to 2008, rarely made use of its ability to request the police arrest those involved in investigations, but it does appear to be looking to bring criminal prosecutions more often (three this year to date) in relation to market abuse,” he says.
Glass believes the FSA is toughening its stance in response to criticism in recent years that it is not doing enough to deter such activity. He expects to see more prosecutions being brought by the regulator in future.
Carlos Conceicao is former head of department within the FSA’s enforcement division that investigates insider dealing. He now works for law firm Clifford Chance. He said the FSA’s power to compel evidence and push for prosecution is not a new thing – it has been in force since 2000.
“What has changed is that the FSA is now far more likely to go on the front foot in publicising these sorts of operations. This fits in with the strategy of showing the world that the regulator is ‘on the beat’,” he said.
So is it all just a lot of hot air? No-one can deny the FSA has made concerted efforts to weed out malpractice in the industry, but it has not yet garnered as much respect as it might have hoped for its troubles.
So is it all just a lot of hot air? No-one can deny the FSA has made concerted efforts to weed out malpractice in the industry, but it has not yet garnered as much respect as it might have hoped for its troubles.
Mike Sargeant, managing director of Lawrence House Fund Managers, says: “Does it change my perception of the regulator? No it doesn’t. The FSA does a good job at the basic level but when it comes to larger market issues I am very cynical. How do you prove someone has started a rumour? It’s like trying to nail jelly to the ceiling. The FSA can’t pin the blame on anyone in particular - the HBOS enquiry was done to appease the public.”