He said fines should be big enough to hurt and "since some of the players are very big, some of the fines should be very big indeed".
The power to fine should be extended to include repayment of profits and restitution to the victims of abuse, as well as the ability to apply to civil courts to fine outside offenders who are not within the regulators' remit.
Lord Runciman, in a speech to the Securities Institute in London, defined cheats as those who commit what are usually regarded as technical offences or lapses of judgement which were actually "calculated irresponsibility" and not as innocuously technical as they were made out.
Other types of cheating involved "deliberately uncorrected misinformation", and those who specialise in driving a coach and horses through loopholes and cutting corners.
He made a distinction between cheats and crooks, who he said should be dealt with by the criminal law.
Lord Runciman said one of the flaws of the Financial Services Act was that the SIB, the lead regulator, had no power to fine, unlike the junior regulators that reported to it.
He demanded much greater use of "naming and shaming" as a punishment, by listing offenders publicly, and he said it was another anomaly that SIB found it hard to do this under the present legislation.
Lord Runciman called for tougher powers to expel cheats completely from the markets, saying "some might say that banishment for life is a lot more serious than being condemned to a few months of watching television in a comfortable open prison before returning to a long and lucrative career in the same sector of business where the offence was committed".
Regulators should be given powers to prevent serious cheats from continuing to practise, whether or not they were authorised to carry out investment business under the act.
They should also have the power to pursue elusive but "potentially nefarious" characters such as shadow directors, bullying shareholders, pseudo-consultants and "even, perhaps, the manipulating spouse".
For certain types of misconduct, naming and shaming could deter offenders from risking a similar demolition of their reputations again; potential offenders would also be deterred when they saw the unpleasant experiences of those whose reputations had been tarnished.
There was a final group of miscreants he called charlatans, who are not deliberately cheating but are not fit to be trusted with other peoples' money or to give investment advice.Reuse content