On 11 September 2009, the FSA published a speech by Margaret Cole, Director of Enforcement, FSA. The speech was entitled Setting out the FSA’s strategy and approach to fighting fraud.

Margaret Cole (MC) began by stating that fraud impacts on three of the FSA’s statutory objectives:

  • Fraud is financial crime.
  • Fraud has a serious impact on UK consumers. It threatens the FSA’s objective of the protection of consumers.
  • In the guise of insider dealing and market abuse it undermines confidence in the integrity of the financial markets.

MC stated that as a regulator, the FSA aims to reduce fraud and financial crime in the UK financial system. It does this by raising industry and consumer awareness. However, the FSA is also a prosecutor with a specific remit. It is the lead agency for prosecuting insider dealing and for prosecuting those who carry on regulated activities without authorisation. The FSA focuses on prosecuting those who pose the greatest risk to the markets and those who, by conducting unauthorised business, pose a risk to consumers.

MC confirmed that prosecutions form a key part of the FSA’s credible deterrence strategy. In recent years the FSA committed itself to take a tougher stance on markets offences. With this commitment came a recognition that criminal prosecutions send a strong deterrent message. MC stated that the FSA is determined to “deliver this message confidently and to be a feared and respected criminal prosecutor.”  

MC confirmed that so far the FSA has begun proceedings in four more criminal cases for insider dealing. Malcolm Calvert is due to stand trial very soon with 12 counts of insider dealing. Neel and Matthew Uberoi are due to stand trial in October - each charged with 17 counts of insider dealing. Neil Rollins will go to trial in November - charged with 5 counts of insider dealing and 4 counts of money laundering. The FSA has also begun proceedings against Andrew King, Michael McFall and Andrew Rimmington - charged with 8 counts of insider dealing.

MC stated that where the evidence does not support a criminal prosecution the FSA will continue to bring civil market abuse cases. She mentions that the FSA has re-articulated its policy for regulatory fines, most recently in its consultation paper on penalties and it will require disgorgement of any “ill gotten gains” in addition to imposing substantial penalties. The FSA is proposing a minimum £100,000 penalty element for regulatory market abuse.

MC then discussed another area where the FSA plays a significant role in prosecuting white collar crime - unauthorised business fraud.

Unauthorised business fraud is a criminal offence and directly impacts two of the FSA’s statutory objectives - reducing financial crime and protecting consumers. The FSA has power to prosecute those who conduct regulated activity without authorisation and those who falsely hold themselves out to be regulated. The FSA also has power to take civil action - to freeze assets and restrain activities by injunction, to wind up firms using insolvency powers and to make individuals bankrupt.

MC stated that bringing criminal prosecutions is not the FSA’s only means of tackling unauthorised business fraud. When fraudulent activity occurs in overseas business, the FSA takes civil action against UK firms who assist them.

In her conclusion MC stated that the FSA is a prosecutor with a defined mandate. It is one of a number of fraud prosecutors in the UK and others have a wider remit. The FSA’s remit means that it focuses its efforts on insider dealing, market abuse and unauthorised business fraud.

View Setting out the FSA’s strategy and approach to fighting fraud, 11 September 2009