SFA nearly doubles number of disciplinary proceedings: Bull market may bring further investigations, warns annual report

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The Independent Online
THE SECURITIES and Futures Authority, which polices the professional securities markets, almost doubled the number of formal disciplinary proceedings begun last year from 23 to 45.

Against the background of a booming securities industry the number of new investigations launched also rose sharply, from 45 to 59, the annual report discloses. In the first three months of this financial year there has been no sign of a fall in case work.

The cases ranged from misappropriation of investors' money to destroying records. One firm was ordered to cease trading and there were fines totalling pounds 800,000.

Richard Farrant, chief executive, said the rise in cases might reflect increased policing of individual members of the SFA.

The report warned that the bull market could bring problems because the entry of 'new, less proven staff into highly active markets may lead to an erosion of standards in conduct of business'.

The price of scarce skills had been bid up and, if market turnover continued to increase, so would the danger of weak risk assessment procedures and controls.

However, Christopher Sharples, SFA chairman, said this section of the report was written in January in a review of regulatory objectives. The system had stood up well to the setback in the market since then and there was 'no red ink or blood on the carpet'.

The report shows the first increase in the number of firms and employees for several years. There was an increase of 26 firms to 1,275 at the end of March and another 25 since. The number of individual members has risen from 34,000 three years ago to 38,000.

The report reveals delays in applications from about 80 members of Fimbra, the regulatory body for intermediaries, who will have to join the SFA in the autumn.

Individual members of applicant firms have to pass the SFA's professional examinations before they can continue in their jobs.