On January 28, the Upper Tribunal (Tax and Chancery Chamber) upheld the decision of the Regulatory Decisions Committee (RDC) of the UK Financial Services Authority (FSA) to impose a fine of £8 million (approximately $12.6 million) on Swift Trade Inc. (Swift Trade), a Canadian company that is not FSA authorized or regulated, for market abuse in the form of “layering.” The RDC decision was reported in the September 16, 2011, edition of Corporate and Financial Weekly Digest.

The Upper Tribunal found that between January 1, 2007 and January 4, 2008, Swift Trade systematically engaged in deliberate market abuse in the form of layering of numerous individual shares on the London Stock Exchange (LSE). The manipulative trading caused a succession of small price movements in the LSE shares and Swift Trade made substantial profits. The abuse was widespread and repeated on many occasions and involved tens of thousands of trading orders by many individual traders, sometimes acting in concert with each other across many locations worldwide. The trading led to a false or misleading impression of supply and demand and artificial market prices in the LSE shares, which was to the detriment of other market participants.

The Upper Tribunal concluded that “the conduct of which Swift Trade was guilty amounted to a cynical course of intensive manipulation of the LSE … carried out over a period of a little over a year, that attempts were made to conceal it, and that, far from demonstrating remorse, those controlling Swift Trade have done everything possible to escape the consequences of their actions. Of its kind, it is as serious a case as might be imagined, and there is nothing which could possibly be said by way of mitigation.”

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