(September 27 – 09:30 ET) – The Financial Times is reporting that the U.K.’s Securities and Futures Authority has brought down penalties on a couple of traders who attempted to manipulate the All-Ordinaries Index of the Australian Stock Exchange.
Nomura (International) plc traders, Robert Mapstone and Gary Channon, were hit with fines and suspensions for a 1996 case in which the two traders attempted to manipulate the ASX’s All-Ordinaries Index with massive wash sales at the close, designed to knock down the index. The traders were short the market and hoped to sell £435 million worth of securities in the last 30 minutes of the day, more than the ASX was trading in a full day at the time. Only a handful of the trades went through, but it was enough to knock 1% off the index.
When the scheme was revealed regulators from Australia, Hong Kong and the U.K. all moved against it. Australia and Hong Kong acted because that’s where the trades took place. The SFA took on Nomura because the firm is based in London.
The SFA essentially banned Mapstone from working in London’s financial markets, and he was ordered to pay costs of £60,000. Channon was fined £60,000 and hit with costs of £20,000, although he wasn’t banned. Channon and Mapstone have left Nomura.
Nomura received the SFA’s second-highest fine ever of £350,000, and £122,944 in costs. The firm defended the trades to Australian regulators as “legitimate stock index arbitrage transactions”.
-IE Staff