The Financial Services Authority's Market Abuse Regime in the United Kingdom

On 1 July 2005, the Financial Services and Markets Act 2000 (Market Abuse) Regulation 2005 (the “Regulations”) came into force in order to implement the EC Directive on Insider Dealing and Market Manipulation (Market Abuse) (2003/6/EC) (the “Directive”). The Regulations amend the market abuse provisions in Part 8 of the Financial Services and Markets Act 2000 (“FSMA”).

The market abuse regime applies to the public at large and not only to the regulated sector. The amendments to the FSMA market abuse regime introduced important changes for publicly traded issuers, their advisors and senior management, those authorised under FSMA, those who recommend investments or investment strategies and those who participate in the investment markets.

The sanctions which may be imposed following a finding of market abuse are severe. Offenders may face unlimited financial penalties and, if they work in the financial services industry, they may have their livelihood removed by having their authorisation/ approval withdrawn or a prohibition order made against them.Specifically, the White Paper outlines the following topics:

• Overview of Civil Market Abuse Regime
• The Code
• Territorial Scope
• Prescribed Markets
• Qualifying Investments
• Insider Dealing
• Improper Disclosure
• Misuse of Information
• Manipulating Transactions
• Manipulating Devices
• Dissemination
• Misleading Behaviour or Distortion
• Encouraging Market Abuse
• Exceptions
• Penalties for Market Abuse
• Suspicious Transaction Reporting
• Other FSMA Provisions
• The Criminal Law

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