David Mayhew, acting Director of Enforcement at the FSA, said:
"Internet bulletin boards can offer a legitimate and valuable source of publicly available information to investors. But when an individual inappropriately obtains and discloses relevant company information, that is not generally available, through the internet, then this will amount to market abuse.
"The FSA considers that timely disclosure of information through authorised channels is crucial to maintaining fair and transparent markets. Improper dissemination of confidential information, by the internet or any other means, can undermine confidence in the market because it ceases to be a level playing field."
Mr Isaacs, an experienced private investor, regularly used internet bulletin boards to exchange information with other investors. He had an acquaintance who was a Trafficmaster employee who received the minutes of internal management meetings. Over the summer of 2003, Mr Isaacs became aware of confidential information within two different sets of minutes.
On the first occasion, Mr Isaacs saw minutes dated 4 August whilst in his acquaintance's kitchen. The minutes contained information concerning Smartnav, Trafficmaster's flagship navigation product, and several leading car brands that were set to offer its installation.
Mr Isaacs memorised this information while his acquaintance was out of the room and posted it on internet bulletin board ADVFN on 3 September.
A second set of minutes, published on 8 September, noted that the 'slightly better than expected' interim results were to be published on 11 September. It also gave details of further Smartnav transactions. Mr Isaacs admitted to obtaining this information and posting it on ADVFN on 10, 12 and 18 September.
Mr Isaacs co-operated fully with the FSA's investigation. This co-operation was taken into account when assessing the level of penalty; but for this co-operation the penalty would have been significantly higher.
Background
- The full text of the Final Notice, dated 28 February 2005, is available on the FSA website. This includes the background to the case, the relevant statutory provisions and the regulatory requirements contravened and the factors taken into account by the RDC when setting the level of the fine.
- Financial penalties are not treated as income by the FSA. They are applied for the benefit of authorised persons (or the issuers of securities admitted to the official list) as appropriate, and so given back to the industry in subsequent years.
- Trafficmaster plc is a technology company in the area of satellite navigation and digital traffic information. Its ordinary share capital is and was at the relevant time traded on the London Stock Exchange.
- The market abuse regime was first introduced by the Financial Services and Markets Act and applies to conduct on or after 1 December 2001. Under the Act the FSA has power to impose financial penalties for market abuse, which is defined as one of three types of behaviour:
- Misuse of information (previous cases include Peter Bracken, Robert Middlemiss, Michael Davies and Hutchings and Smith)
- Misleading statements and impressions (Shell and Bonnier and Indigo)
- Market distortion (EBG
& Potts)
The proceedings in this case relate to the first category of behaviour – misuse of information – which involves making improper use of information that other investors would regard as significant in advance of that information being announced to the market as a whole. The provision protects investment markets, such
- The FSA regulates the financial services industry and has four 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; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve our business capability and effectiveness.
