FCA secures £7.5m penalty in High Court case

In July and August 2011, the FCA successfully applied for an interim injunction restraining Da Vinci Invest Ltd, Da Vinci Invest PTE Ltd, Mineworld Ltd, Mr Szabolcs Banya, and Mr Gyorgy Szabolcs Brad from committing market abuse and freezing the assets of the three companies.

The defendants were found to have committed market abuse in relation to 186 UK-listed shares using a manipulative trading strategy known as “layering”. This involves the entering and trading of orders in relation to shares traded on the electronic trading platform of the London Stock Exchange and multi-lateral trading facilities in such a way as to create a false or misleading impression as to the supply and demand for those shares and enabling them to trade those shares at an artificial price.

This is the first time that the FCA has asked the High Court to impose a permanent injunction restraining market abuse and a penalty. Four of the five defendants were incorporated or resident abroad in Switzerland, the Seychelles and Hungary.

A hearing is to be fixed to determine various consequential issues including the terms of the final injunction. The FCA has secured a number of other enforcement actions against firms and individuals for layering including cases against Swift Trade and Michael Coscia.

Georgina Philippou, acting Director of Enforcement and Market Oversight, said:

“This case demonstrates that we are prepared to take robust action to ensure the integrity of UK markets. We acted quickly to stop the abusive behaviour in 2011 and today’s judgment means that those behind the abuse will now have to pay significant financial penalties.

“This was a sophisticated form of abuse that took place across multiple trading platforms. Today’s judgment shows the FCA’s ability and determination to stamp out abusive market practice wherever it may occur in UK markets. As the judge states, “Protecting the integrity and proper functioning of those markets is a matter of substantial importance to individuals as well as to national and international economic interests”.