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Unit 10 - Market Abuse, Insider
Dealing, and Fraud Prevention
- The avoidance of organisational exposure
to, or involvement, in financial crime is a
priority for all financial services firms.
- The reputational, legal and regulatory risks
emanating from financial crimes are significant.
- Some types of this crime
are: market abuse (including
insider dealing), fraud, false
accounting, bribery and
corruption, tax evasion.
- When this happens under SUP15.3.17R
FCA must be informed
- When this happens under SUP15.3.17R
FCA must be informed
- Insider dealing, market manipulation,
misleading statements and market abuse
are all examples of conduct that offends one
of the core objectives of financial services
regulation
- Affects stability and integity
- Affects stability and integity
- white collar crimes’ are NOT
‘victimless crimes’, as they impact on
so many investors & consumers alike
- Taking advantage of
others to gain is plainly
wrong,
- Taking advantage of
others to gain is plainly
wrong,
- Market Abuse Directive (MAD)
- As a result of MAD, Part VIII of the
UK Financial Services and Markets
Act 2000 (FSMA) was
substantially rewritten.
- relates to ‘insider‘ and ‘inside
information‘ ie, insider dealing, misleading
statements, market manipulation
- relates to ‘insider‘ and ‘inside
information‘ ie, insider dealing, misleading
statements, market manipulation
- As a result of MAD, Part VIII of the
UK Financial Services and Markets
Act 2000 (FSMA) was
substantially rewritten.
- Types of offences
- Insider Dealing is an offence that is
committed by anyone who acquires
privileged information and acts upon it.
- Misleading statements are creating a false or
misleading impression to the market, so people
make the wrong decision on the back of this
informmaion whether it be dishonest, reckless,
deliberate or otherwise
- Any person who does any act or engages
in any course of conduct which creates a
false or misleading impression as to the
market by attempting manipulation
- Insider Dealing is an offence that is
committed by anyone who acquires
privileged information and acts upon it.
- Examples of this are: Barings & Nick Leeson and fraud, Asif Butt – a Compliance Officer
goes to jail for insider info, Shell and the false amount of hydrocarbon reserves it had,
UBS trader Kweku Adoboli, who was alleged to have lost UBS $2 billion in unauthorised
trading
- Other types of fraud in Financial services:
Boiler Room Scams, Ponzi Schemes, Wire
transfer fraud schemes, Cheque Fraud,
Credit card fraud, Phishing and vishing,
Identify theft, Securities frauds conducted by
investment businesses,
- Other types of fraud in Financial services:
Boiler Room Scams, Ponzi Schemes, Wire
transfer fraud schemes, Cheque Fraud,
Credit card fraud, Phishing and vishing,
Identify theft, Securities frauds conducted by
investment businesses,
- The Compliance department may not see its primary role as a fraud detection and prevention unit.
Management, however, may expect it to undertake this role. Therefore, this expectations gap needs to be
managed. Compliance may, as a minimum, have to provide an independent assurance on the effectiveness
of the processes put in place by management to manage the risk of fraud.
- There is also Bribery and
corruption, False accounting,
cartels and even oligopolies
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