The Financial Services Authority (FSA) has today fined Andrew Charles Kerr, a former commodity broker from Sucden Limited, £100,000 for market abuse. The FSA has also banned Kerr from working in the financial services industry on the grounds that he is not a fit and proper person.
On 15 August 2007, Kerr deliberately manipulated the market in London International Financial Futures and Options Exchange (LIFFE) traded coffee futures and the related coffee futures options. Implementing a plan previously developed with his client, Kerr executed trades during a key one minute period of trading in order to increase artificially the price of coffee futures, the results of which were intended to benefit his client. Although Kerr was successful in his attempt to manipulate the market his client did not make the intended profit. This in no way diminishes the seriousness of his market abuse.
Kerr actively encouraged the market manipulation and benefited financially through his standard commission on the trades. Also, while being investigated, Kerr provided false and misleading information. This demonstrates that Kerr lacks the integrity required of a fit and proper person and that he poses a risk to the FSA’s statutory objective of maintaining confidence in the financial system. The FSA considers this to be a serious case of market abuse that had the effect of creating a false or misleading impression of market prices.
Alexander Justham, director of markets, said:
"Market manipulation is a serious offence. Kerr breached the standards expected of approved persons and has paid the price. Participants in the futures and options markets should be in no doubt about how seriously the FSA views manipulation which disrupts proper pricing mechanisms and risks a false market in the underlying commodity.
This fine and the ban from working in the financial services industry are significant penalties and should serve as a reminder to all that market manipulation will not be tolerated regardless of whether any profit was made."
All firms involved co-operated fully with the FSA and there has been no criticism of their supervision or their internal procedures during the course of the investigation. LIFFE provided assistance to the FSA throughout the investigation.
Kerr agreed to settle this case and therefore qualified for a 20 per cent discount under the FSA’s executive settlement procedures. Had Kerr not settled at this stage the FSA would have imposed a financial penalty of £125,000.
Background
- The Final Notice for Andrew Charles Kerr can be found on the FSA website.
- The FSA regulates the financial services industry and has five objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
