FSA Fines Two Firms for Transaction Reporting Failures


On October 24, the UK Financial Services Authority (FSA) announced that it had fined two firms for failing to provide accurate and timely transaction reports. Plus500UK Limited (Plus500), an online contacts for difference (CFD) trading facility provider, was fined £205,128 (approximately $330,000) and James Sharp and Company (James Sharp), an independent stockbroker, was fined £49,000 (approximately $78,500).

The FSA found that between June 29, 2010, and November 5, 2011, Plus500 conducted 1,332,000 reportable transactions. It failed to report any of these transactions accurately and failed to report 189,000 of them at all. In relation to James Sharp, the FSA found that the firm had failed to report any of the approximately 71,000 reportable transactions that it undertook between November 5, 2007, and February 8, 2011.

The FSA concluded that each firm had breached Principle 3 of the FSA’s Principles for Business as well as rule SUP 17.1.4R of the FSA Handbook which imposes specific transaction reporting obligations. The systems and controls of both firms were inadequate. Each firm failed to establish appropriate reporting systems, did not have any documented procedures in place in relation to transaction reporting, and failed to provide training to relevant staff.

The FSA stated that Plus500 is the first firm to be fined in respect of transaction reporting failures under the FSA penalties policy which applies to breaches occurring on or after March 6, 2010. Under the new policy, the penalty imposed is based on the number of affected transactions; in Plus500’s case the penalty was higher than it would have been under the prior penalty regime.

David Lawton, FSA Director of Markets, said: “Accurate transaction reports are a key tool in our efforts to tackle market abuse. We will take action where necessary to ensure firms – regardless of size – comply with their reporting obligations. As well as a financial penalty, firms can also expect to incur the cost of resubmitting historically inaccurate reports.”

Both firms had taken steps to improve their processes and resolve the errors, resubmitting reports to the FSA where necessary. The firms cooperated with the FSA and entered into settlements at an early stage of proceedings. Accordingly, both qualified for a 30% reduction of the fine.

This is the latest in a series of FSA disciplinary actions with respect to transaction reporting failures dating back to 2010. For examples of earlier disciplinary actions see the April 9, 2010, April 30, 2010, and January 28, 2011, editions of Corporate and Financial Weekly Digest.

Read more on Plus500.

Read more on James Sharp.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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