Day trader hits back at FSA after £1m fine reduced
The offending scheme involved small early-morning orders to dictate the prices offered by spread-betting companies
Wednesday 15 June 2011
A day trader fined £700,000 by the Financial Services Authority (FSA) for market manipulation yesterday hit back by accusing the City watchdog of heavyhandedness and protecting spread-betting firms from their own carelessness.
The FSA reduced its fine on Barnett Alexander from £1m because he settled and reclaimed £629,130 on behalf of firms he traded with.
He was punished for manipulating the price of shares on the London Stock Exchange by entering small orders to buy and sell shares and affect the price of spread bets.
However, Mr Alexander claimed yesterday his actions did not affect the value of shares . Instead, he said he took advantage of spread-betting firms, which are "virtual" exchanges.
His small early-morning orders to buy and sell shares would dictate the price offered by the spread-betting firms and he would then make a big order of, say, 30,000 virtual shares at the spread-betting firm – usually City Index – and close out his position at a profit.
He said: "My argument is those 30,000 shares don't manipulate the market. They have consequences but those consequences are aimed at City Index, not at hurting the integrity of the market.
"The FSA is there to protect the market, not to protect City Index."
The FSA pointed to the size of the fine, Mr Alexander's decision to settle and the fact that he used "third-party" names to hide his activities as evidence of the seriousness of his actions.
Mr Alexander, a former stockbroker, said he used his wife's name for some trading because spread-betting firms often closed down accounts for profitable traders.
He said it was impossible for day traders, working from home without compliance departments to know what was not allowed under the rules on market abuse, where the FSA is cracking down.
Tracey McDermott, the FSA's acting director of enforcement and financial crime, said: "Alexander's behaviour was deliberate and repeated over a significant period of time. He sought to conceal his trading and made substantial profits at the expense of the firms which allowed him to trade."
City Index said: "Since February 2010, City Index has been aiding the FSA in its investigation of suspicious trading activities carried out by Alexander.
"This involved him abusing the City Index trading system, which gives our clients the benefit of extra liquidity when trading certain equity markets," it added.
- 1 If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
- 2 Moscow voted the world's unfriendliest city
- 3 Idris Elba is ‘too street’ to play 007, says James Bond author
- 4 Pansexual: What is it - and when did the term gain popularity?
- 5 I'm pansexual – here are the five biggest misconceptions about my sexuality
Bono's group has made more money from Facebook investment than from all his music
Miley Cyrus calls out hypocrisy of women’s nipples being taboo
Auschwitz museum defends mist showers installed during heat wave after visitor complains they are reminiscent of gas chambers
More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
Nazi 'gold train': Fire engulfs suspected location of vehicle in Poland
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
UN investigating British Government over human rights abuses caused by IDS welfare reforms
iJobs Money & Business
£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...
£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...
£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...
£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...