Regulation  

FCA granted appeal against prohibition rejection

The Court of Appeal has allowed the Financial Conduct Authority to appeal an Upper Tribunal’s decision not to impose an prohibition order on an investment banker for alleged market abuse

The FCA wanted permission to appeal the Upper Tribunal’s decision on November 2012, which overturned a final notice from the then Financial Services Authority imposing a £175,000 fine and a prohibition order against David Hobbs, a former proprietary trader at the UK arm of Japanese investment bank Mizuho.

The FSA issued the notice against Mr Hobbs for alleged market abuse after he executed a trade in coffee futures in the final minute before the options he held were due to expire.

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According to the FSA, Mr Hobb’s correspondence with the broker executing the order, Andrew Kerr, proved that he was attempting to manipulate the market.

However the Upper Tribunal stated the regulator failed to prove his correspondence with a broker over a late trade was obvious manipulation and that while he “emerged with little credit” and was described as engaging in a “flight of fancy”, no action should be taken.

The FCA, however, sought an appeal over Mr Hobbs’ conduct during the hearing.

In a statement the FCA said: “We welcome the Court of Appeal’s decision. The Court of Appeal has remitted the matter to the Tribunal for it to decide whether, in light of the findings made by the Tribunal regarding Mr Hobbs’s conduct during the investigatory and Tribunal processes, a prohibition order should be imposed on Mr Hobbs.”