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Close Brothers fined over alleged market abuse

UK market maker Close Brothers lost an appeal against a fine by the Financial Services Authority (FSA) in relation to alleged market abuse back in 2004. It is alleged that the company undertook a number of transactions in a company called Fundamental-E Investments in such a way as to allegedly mislead the market about the position of the company and true value of the shares. The company is also said to have made around £900,000 from trading the shares during a six-month period.

A fine of £4 million was imposed against the company and individual fines of £200,000 and £50,000 against two members of the company's Winterflood subsidiary. This is just the latest in a long line of fines dished out by the FSA as the clampdown on alleged market abuse, insider trading and other financial misdemeanors continues. There is no doubt that we have seen a massive sea change in the strategy and the actions of the FSA and this has been welcomed across the board.

Rather bizarrely, if the Conservative party wins the next election we could see the FSA closedown or become a less powerful subsidiary of the Bank of England in the world of regulation. It would be interesting to see how the next government, potential a Conservative government, would justify closing down an operation which has never been more successful than it is today.

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