FSA has won its case in the FSMT against authorised firm Winterflood and two of its advisers. Winterflood is an FSA-authorised firm and the largest market maker in AIM securities. Last year, FSA found the firm and its traders had distorted the market for shares in Fundamental-E Investments Plc and had misled the market. FSA fined the firms £4 million and the two traders £200,000 and £50,000. Winterflood had referred the matter to FSMT on a point of legal interpretation. It contended FSA had to prove some element of mental intent to distort and mislead the market (an "actuating purpose" under the Code of Market Conduct). FSA said the behaviour merely had to fall within the definitions in s118 FSMA. FSMT agreed with FSA. Winterflood and the traders are now seeking permission to appeal to the Courts.

Margaret Cole said FSA expects market professionals to always be alert to obvious indications of wrongdoing. She said Winterflood should have seen the warning signs but because it carried on the trades its actions led to serious losses for investors and damaged confidence in the market.