Winterflood, the largest market maker on the AIM market, lost its appeal against the decision of the Financial Services and Markets Tribunal in March 2009, which found they had committed market abuse.
Winterflood had been accused of failing to recognise and react to clear warning signs that something was amiss, and instead of challenging trades Winterflood allowed them to go ahead and make large profits as a result. The Court of Appeal has found in favour of the FSA and now requires Winterflood to pay a fine of £4m, while the two traders in question, Sotiriou and Robins, must pay a fine of £200,000 and £50,000 respectively.
The significance of the case is that it was found that s118 of FSMA is wholly objective; that is, market abuse can exist irrespective of whether or not there was any intention to commit an offence. (Winterflood had previously argued that there had to be a form of ‘actuating purpose’ or subjective mental element on the part of the accused to mislead or distort the market). The message is that the FSA is determined to take tough action to tackle market abuse.