Investor hit with $9.6m fine over illegal deals

FSA dishes out record punishment to Indian businessman following scam at Stock Exchange

A Dubai-based private investor was yesterday hit with a $9.62m (£6m) penalty by the City watchdog, the largest it has yet levied against an individual for market abuse.

The Financial Services Authority (FSA) said Rameshkumar Goenka, an Indian businessman, pushed through a series of huge trades in securities issued by Reliance Industries to boost their closing price in the final seconds of the London Stock Exchange's closing auction held at the end of the trading day.

The move was intended to ensure he avoided a $3.1m loss on a derivative contract he had taken out with an unnamed bank.

Reliance is an Indian conglomerate with interests ranging through petrochemicals, energy, textiles and even retail. While its main listings are in Bombay and New York, its securities are also tradable on a number of other exchanges, including London's.

The crooked trades were executed in October 2010 because the payout on the derivative he held was partly dependent on the closing price of Reliance. Because the trades meant that the bank that issued the derivative overpaid him, he was told to pay back the $3.1m in addition to a $6.5m fine. The watchdog said that Mr Goenka had agreed to settle at an early stage of the inquiry, reducing the fine by 30 per cent.

According to the FSA, the plot was hatched when an adviser to Mr Goenka contacted a London broker in order to understand how the auction worked.

A number of "dry runs" were performed before it was enacted. Orders equivalent to 280 per cent of the average daily volume of trading in Reliance in London were pushed through at a time when other traders would have no time to respond. This inflated the shares' closing price.

At the conclusion of the auction Mr Goenka was said to have hailed the London broker as "the world's number one broker", saying that he really appreciated his efforts and assuring him of "good business" in the future.

Life and Style
food + drink
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
Life and Style
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

COO / Chief Operating Officer

£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments