ENF 14.3 Financial penalties and public statements in market abuse cases

Under section 123(1)(a) and section 123(1)(b) of the Act (Power to impose penalties in cases of market abuse), the FSA may impose a financial penalty where a person (A):

1. (1)

   is or has engaged in market abuse; or

2. (2)

   by taking or refraining from taking any action has required or encouraged another person or persons to engage in behaviour which, had it been engaged in by A, would amount to market abuse.

See ENF 14.5.1 G for the factors the FSA may take into account when determining whether either of these two conditions is met.

Section 123(2) of the Act states that the FSA may not impose a penalty on a person if, having considered any representations made to it in response to a warning notice, there are reasonable grounds for it to be satisfied that:

1. (1)

   the person believed, on reasonable grounds, that his behaviour did not fall within section 123(1)(a) or section 123(1)(b) of the Act; or

2. (2)

   he took all reasonable precautions and exercised all due diligence to avoid behaving in a way which fell within section 123(1)(a) or section 123(1)(b) of the Act.

The FSA can apply to the court under section 381 of the Act (Injunctions in cases if market abuse) for an injunction restraining market abuse and under section 383 of the Act (Restitution orders in cases of market abuse) for an order for restitution in market abuse cases. In these cases, under section 129(1) of the Act (Power of court to impose a penalty in cases of market abuse), it may ask the court to consider whether the circumstances are such that a penalty should be imposed on the person concerned. In deciding whether to ask the court to impose a financial penalty, the FSA may take into account, amongst other matters, the factors set out in ENF 14.4.2 G and ENF 14.6.2 G (1) to ENF 14.6.2 G (6). The FSA's power to apply to court for injunctions and orders for restitution in market abuse cases are described in ENF 6 (Injunctions) and ENF 9 (Restitution and redress) respectively.

Section 123(3) of the Act states that if the FSA is entitled to impose a penalty on a person under section 123(1) (see ENF 14.3.1 G and ENF 14.3.2 G) it may, instead of imposing a penalty on him, publish a statement to the effect that he has engaged in market abuse.