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Thursday, June 03, 2010

FSA Loses Insider Trading Case - but more to come...

Posted by John Bates

Today’s insider trading cases acquittals in London are a big blow to the FSA, but their ability to detect and prosecute these market abusers cannot be overlooked. Without the technology to detect the trading anomalies, alleged white collar criminals cannot be prosecuted in the first place.

It’s also clear that the FSA is sending a message to the investment community: shape up or be prepared to pay. The £33.32 million ($48.8 million) fine for JPMorgan is the largest in the FSA’s history. 

As the SEC and CFTC in the US looks to adopt market surveillance technology, it will be interesting to see the potential rise in insider trading court cases and the size of fines in the US.

I think we're going to see a lot more of this type of prosecution around the world. The FSA is currently prosecuting 11 people for alleged market abuse.

As you may have read this week (link here -> http://bit.ly/aslFmV), the FSA is using new technology to crack down on potential market abusers. in the UK, the FSA receives 6m-8m transaction reports daily. The FSA will soon even have a system in place that will automatically alert staff to potential abuse in “real time”. Alexander Justham, the FSA’s director of markets, says the use of such “complex event processing” technology will give the FSA “a more proactive, machine-on-machine approach” to surveillance.


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