Winterflood appeals against £4m FSA fine

Winterflood appeals against £4m FSA fine

The stockbroker Winterflood is appealing against a £4m fine from the Financial Services Authority for market abuse.

The fine is the largest the City regulator has levied on a regulated firm and relates to events in 2004. It is the highest profile challenge to the FSA for some time. Two traders at Winterflood are also thought to be appealing against the ruling.

Winterflood, part of the investment bank Close Brothers, said the FSA fine related to trading in shares in Fundamental-e Investments, a firm whose purpose is to maximise the value of its property site in Kilsyth. It is listed on the Alternative Investment Market. The trades were for third parties, rather than Winterflood.

Close Brothers said any fine would not affect its financial results or those of Winterflood as it had taken a provision to cover the fine and the cost of the appeal.

The appeal refers the FSA's decision to the financial services and markets tribunal, which will now hear the case in public rather than in private at the FSA. The FSA's website shows that 11 other referrals are awaiting decisions by the tribunal but none are from firms or individuals as prominent as Winterflood, founded by the City veteran Brian Winterflood in 1988.

Close said Winterflood was a market-maker in Fundamental-e at the time of the trades in question. "The FSA alleges that Winterflood failed to have appropriate regard to warning signs and failed to ask questions of the propriety of.....continued below

Advertisement starts

---

---

Advertisement ends

the third-party trades in Fundamental-e executed by Winterflood and therefore committed market abuse," Winterflood said. "It is not alleged that Winterflood or its traders deliberately committed market abuse."

guardian.co.uk © Guardian Newspapers Limited 2008