- Insider trading — Market abuse — Market Abuse Directive (MAD) — Financial stability — UK Financial Conduct Authority (FCA)
1.01 The UK Government, like most others, has long said that the principal aims of its financial services regulation are to preserve the integrity of its financial markets and to protect consumers.1
Financial services are immensely important to the UK economy. In 2015, the UK’s trade surplus in financial services was £63bn. This was more than the combined surpluses of the next three leading countries (US, Switzerland, and Luxembourg). Historically, the UK has enjoyed the leading share of trading in many international financial markets such as cross-border bank lending (16 per cent), international insurance premium income (29 per cent), and foreign exchange trading (37 per cent). It has been a global leader in providing professional services. The UK has been the heart of Europe’s financial system with London its pre-eminent financial capital.2
(p. 2) On 23 June 2016 the UK voted to leave the European Union. The vote will have immense implications for the financial services sector. The degree of inter-linkage between the ‘City’ and the EU economies is substantial, both economically and intricate in terms of the legislative interface.
The current Government has also stated that there will be a ‘Great Repeal’ of EU laws, currently part of UK law, that are no longer wanted in the UK. However, it is likely that those laws and regulations adopted to prevent and punish market abuse will remain in place. There is no benefit to be gained by reducing the bars to market abuse.
Before 2013, the Financial Services Authority (FSA) was the unified financial market regulator of the UK. In that year, the new Financial Services Act 2012 (FS Act 2012) took effect on 1 April 2013 and amended almost 100 other Acts, including most importantly, the Financial Services and Markets Act 2000 (FSMA), the Bank of England Act 1998 (BEA 1998), and the Banking Act 2009 (BA 2009).
One of the key changes was that the FSA was replaced by two regulators: the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The principal responsibility for regulating financial market conduct generally, and for preventing, investigating, and punishing market abuse was given to the FCA.
The FCA’s principal regulations governing market conduct are:
• the Principles for Businesses (PRIN);
• the Conduct of Business Sourcebook (COBS);
• Statements of Principle and Code of Practice for Approved Persons (APER); and
• Senior Management Arrangements Systems and Controls (SYSC).
The aims of the FCA are both to preserve financial stability and the expectation that it will remain stable. One of the principal ways that this is done is by preventing what is called ‘market abuse’. ‘Market abuse’ can generally be described as improper market behaviour, such as:
• insider trading;
• various techniques of market manipulation; and
• any other behaviour interfering with the fair and efficient operation of financial markets.
• criminal sanctions for insider dealing and misleading statements and practices;3
(p. 3) • supervisory and disciplinary powers exercisable over regulated firms and registered individuals employed by a variety of former self-regulatory organizations (SROs)4 and, later, similar powers in respect of authorized firms and approved persons working within them.5
The FCA has, at its disposal, some powerful weapons against market abuse. They include the PRIN, which set out the fundamental obligations of all firms under the regulatory system. These impose general obligations such as the requirement that ‘a firm must conduct its business with integrity’.6 They apply to all regulated firms. If the FCA decides that some firm has violated a Principle it may employ a range of sanctions up to and including the option of putting the firm out of business by withdrawing its authorization.
1.03 In the past, UK measures to prevent market abuse were considered in some respects ineffective and in others incomplete. For example, there were failures of a number of high-profile criminal trials that exposed weaknesses in the insider trading laws and attempts to criminalize improper market behaviour.7 As to this ‘gap’ in protection, Melanie Johnson, economic secretary to the Treasury, commented during parliamentary consideration of the FSMA:
We protect the financial markets in two ways. First, there are the criminal regimes for market manipulation and insider dealing. These are both serious criminal offences … Secondly, there is the regulatory regime under which various regulatory bodies can take action against regulated persons for market abuse. However, there is a gap in the protections.8
1.04 The gap was partially filled by the market abuse prohibitions in ss 118–132 of the FSMA and regulations in the UK regulator’s (then the FSA) Code of Market (p. 4) Conduct9 contained within the Business Standards section of the regulator’s Handbook of Rules and Guidance.10
(2) The broad scope of the new ‘civil offence’
1.05 After the introduction of express market abuse prohibitions in 2001, and during discussions of the adoption and implementation of the EU Market Abuse Directive11 and the Code, concern was expressed about the exact descriptions of possible market abuse behaviour and problems of ambiguity relating to such descriptions in the Code or implementing instruments of the Directive.
It is true that the sanctions specifically defined as being applicable to market abuse are in many respects not as broad as the disciplinary sanctions the FCA has at its disposal to control and punish market misbehaviour mentioned above. However, it should be noted that complaints about the broad nature of these powers will probably be given short shrift by the UK Courts. In Fleurose v The Disciplinary Appeal Tribunal of the Securities and Futures Authority Limited15 a complaint that charges made against a Senior Cash Arbitrage Trader employed by J P Morgan Securities Ltd that he breached [the then FSA’s] Principles 1 and 3 were unfairly vague so as to prejudice a fair trial were rejected.
The accused complained that such broad allegations conflicted with his Article 6 Right to a Fair Trial under the European Convention on Human Rights. The Court held:
So far as vagueness is concerned, [Counsel for Mr Fleurose] did not and could not seek to suggest that M Fleurose did not know of what he was accused. … His defence was that he did not have the relevant state of mind. Like the Judge, we consider that the admitted lack of specificity in the general principles, quoted in paragraph 18 of the judgment below, did not, in those circumstances, help M Fleurose to make out a case that the hearing had been unfair.16
1.06 Therefore, rather than being too concerned about the exact boundaries of specific descriptions of market abuse, it is far healthier for a financial market participant, (p. 5) and its advisers, to be constantly aware of the UK’s general regulatory position that market activity must not jeopardize the fair and efficient operation of the UK financial markets.
How the ‘civil offence’ of market abuse came to be a distinct tool in the UK’s regulatory armoury is discussed in the following sections.
1.07 The regulation of market abuse is an increasingly complex and controversial issue in the world of financial trading. It is increasingly complex because of the proliferation of regulations in different jurisdictions that overlap in the international market. It is increasingly controversial because traders are afraid that overlapping market abuse regulations will harm market liquidity and trading profitability.
1.08 In the US, ‘market manipulation’ and ‘insider dealing’ have long been subject to both regulatory and criminal penalties. In some circles, this has been perceived as an effective method of giving US regulators the flexibility they need to deal quickly with developing market changes and/or disruptions.
1.09 Prior to the advent of the ‘civil offence’ of market abuse in the FSMA, the UK did not have a specific scheme to control ‘market abuse’. Aside from the criminal and regulatory sanctions mentioned above, the main protection for investors was to remember the maxim caveat emptor, or ‘let the buyer beware’. As noted above, there were good reasons to beware. From a criminal perspective, for example, even outright fraud was extremely difficult to prove in the context of investment transactions.
1.10 In fact, it was the laissez-faire ‘self-regulation’ climate of the City of London (where the traditional guarantee of integrity was ‘my word is my bond’)17 that kicked off the original author’s long career in financial services law. In the 1970s and early 1980s, cases involving claims of UK financial market participants against US or UK companies operating in the UK were often brought in the US because redress could not be effectively sought in the UK. The US Courts were often willing to accept that foreign claimants could bring such litigation in the US.
1.11 Since that time, the financial services business has grown dramatically. The London Stock Exchange’s so-called ‘Big Bang’ of 1986 abolished the traditional (p. 6) regime of ‘single capacity dealings’, that is, where an investor had to seek advice from a ‘stockbroker’ who acted as intermediary between the investor and a ‘stockjobber’ or retailer of shares. This offered some measure of investor protection. Once ‘dual capacity dealing’ became the norm, firms became simultaneously brokers and dealers. The potential for conflicts of interest became acute and contributed to the implementation of the UK’s Financial Services Act 1986 (FS Act 1986) as a necessary measure to provide protection for investors and deter abuses of the market.
1.12 The UK Government became increasingly persuaded that more formal protection of UK financial markets from ‘abuse’ would be a key factor in assuring their success. This climate was responsible for the creation of two specific categories of market conduct criminal offences. First, the Companies Act 1980 made insider dealing a criminal offence for the first time. This made it a criminal offence for the possessor of non-public information which affected the price of securities (known as ‘inside information’) to deal in those securities, to encourage others to do so, or to disclose the information other than in the proper performance of his employment, office, or profession. Following revisions to the Companies Act in 1985, the offence was replaced by the Companies Securities (Insider Dealing) Act 1985. In 1993 an EU Directive on Insider Dealing led to the Criminal Justice Act 1993 (CJA) and the insider dealing offences now found in Part V of that Act.
1.13 Secondly, s 47 of the FS Act 1986 made it a criminal offence for any person to knowingly make a false or misleading statement or to dishonestly conceal material facts in connection with the purchase or sale of an investment.18
1.14 Both the above provisions impose severe penalties (fines or imprisonment of up to seven years) but their effectiveness in regulating financial markets is limited in important ways. First, the application of the insider dealing prohibition of the CJA is limited to ‘price-affected securities’, which has been a difficult concept to define. Second, the bringing of a criminal prosecution is a cumbersome process. It takes time, and obtaining a conviction for an offence requires proof of the mens rea constituting the offence established beyond reasonable doubt, with the defendant entitled to legal aid under certain circumstances. It is easy to see that with the high standards required in criminal prosecutions, criminal penalties cannot be used as flexible or efficient regulatory tools.19
1.15 The regulatory authorities including the Securities and Investments Board (SIB), the Securities and Futures Authority (SFA), and their successor, the FSA, relied on conduct constituting insider dealing as evidencing a lack of fitness and propriety by the perpetrator to operate in the financial services sector. This could lead to a (p. 7) direction disqualifying an individual from employment in investment business,20 but such powers did not permit the quick action needed to respond to market disruptions. Also, in responding to an incident of insider dealing the FSA could seek to impose punishment for such behaviour on the basis that the registered person in question was guilty of violating more general FS Act 1986 principles such as:
• Principle 1: failure to observe high standards of integrity and fair dealing;
• Principle 2: failure to act with due skill, care and diligence;
• Principle 3: failure to observe high standards of market conduct; and
• Principle 6: conflict of interest.21
1.16 However, as Sir Howard Davies, then Chairman of the FSA, reflected in 1998:22
I think we have to recognise, sadly, that the City’s image is not all it might be. There have been too many ‘accidents’ for that to be so … Putting all these together might suggest that the City was constantly riven with scandal. And of course those who watch these affairs closely will be aware that in this lengthy list of scandals, relatively few of the participants have been brought to book. There have been some prosecutions, certainly … But the record in heavily contested serious fraud trials has, frankly, not been good. And remarkably few prosecutions have been brought for insider trading. There is a common perception, which is hard to dismiss, that City crime is simply not punished on the same basis as other forms of theft.
1.17 By that time it was recognized that the financial markets were changing and expanding too rapidly for financial services regulation under the FS Act 1986 to be able to keep up. As Davies said in another speech that year:
One of the problems we have experienced with the Financial Services Act of 1986 is that it is not as adaptable to the new markets and products as we, or financial institutions themselves, would like it to be.
1.18 Consequently, in May 1997, the Government announced proposals to reform the financial services regulatory system in the UK. In July 1998, the Treasury published a paper explaining the policy of the proposed financial services reforms in detail and including a draft of a new Financial Services and Markets Bill23 (the Bill). The Bill proposed to change UK financial services regulation by designating the FSA as the single regulator for authorization, supervision, and enforcement in financial services business24 and giving the FSA a range of new powers to combat market misconduct including:
• investigation powers;
• the power to bring criminal proceedings in cases of insider dealing or with respect to misleading statements and practices;
• the power to impose civil fines in cases of market abuse; and
• the power to seek restitution orders in cases of market misconduct.25
It is clearly intended to create a one-stop arrangement for regulation and to provide both flexibility and accountability.26
1.20 In the Bill, the Government made it clear that its principal regulatory objective was to maintain market confidence in the financial system of the UK, which included the financial markets and exchanges, regulated activities, and any other activities connected with financial markets and exchanges.27 The other objectives were promoting public understanding of the financial system, protection of consumers, and the reduction of financial crime. As the Treasury has stated in a memorandum to the Joint Committee on Financial Services and Markets:
The UK financial services industry is highly successful and vitally important to the UK economy. It accounts for 7% of the GDP and employs over one million people.28
Stephen Byers has explained the Government’s aim in reforming the regulatory system. He has explained that the new legislation is designed to be flexible enough to cope with changing financial markets in the future. Indeed, when he first announced the reform, the Chancellor of the Exchequer said that he planned to devise a regulatory system for the 21st century … But flexibility means a greater degree of freedom for the Regulator to make rules, from time to time, and change them. And that puts a heavy burden of responsibility on those responsible for the details of regulation. So we decided that it was important for the FSA to publish, alongside the new draft Bill, a paper which explained how, in current circumstances, we would use the freedom we would be given, were the Bill to pass its present form. Of course, this cannot pre-judge the ways in which we might change the regulation in the future.29
… [T]hat points to the need to regulate financial markets in a way which attempts to raise standards within firms themselves, rather than simply imposing them through inflexible rules from the outside.30
• confidence in financial markets is critical to the economy of the UK;
• those markets offer significant opportunities to profit and significant risks, both to individuals and to the UK economy;
• participating in those markets is a privilege, not a right;
• to earn that privilege, a participant must be willing to assume, in cooperation with other participants, certain obligations; and
• the principal obligation is for market participants to conduct their affairs so as not to compromise the fair and efficient operation of the market, or to unfairly damage the interest of the investors.31
1.24 Effective enforcement of this key obligation requires a regulatory system which the Government, the regulators, and market users must recognize requires enough flexibility to deal with unforeseen future events, which prevents regulatory standards from being defined, in advance, with complete precision. In late 2001, the UK thus implemented new penalties for market abuse in the FSMA. Their adoption had two important general consequences. First, these penalties for market abuse applied to all regulated markets and to most trading ‘related’ to regulated markets. Second, they were thought to provide the UK with a new flexibility in regulating its financial markets nearly equivalent to that enjoyed by US regulators.
1.25 The FCA has not had a long history of actively enforcing the UK market abuse regime. However, as shown in Chapter 14 below, it has been active in imposing fines for certain kinds of market abuse.
1.26 Another key block in the structure of UK market abuse regulation is the adoption and implementation in the UK of the new EU Market Abuse and Insider Trading Directive, and more recently, the Market Abuse Regulation (the Regulation),32 and for wholesale energy markets, the REMIT.33 The Market Abuse Directive was (p. 10) passed by the European Parliament by a substantial majority on 14 March 2002.34 The effective date for UK regulations implementing the Market Abuse Directive was 1 July 2005.
1.27 Technical implementation of the Directive was assisted by measures decided by the European Commission, with the aid of the European Securities Commission (made up of Member State Representatives) with consideration of technical advice from CESR35 (made up of national authorities). The Directive required each Member State to nominate one regulatory body to deal with market abuse and insider dealing.36 In the UK, that body (or ‘Authority’ as it is often referred to in legislation or regulations) was then the FSA, now the FCA. For purposes of EU regulation, market abuse may be described as:
Behaviour causing investors to be unreasonably disadvantaged by others through insider dealing or market manipulation.37
1.28 The international control of market abuse became a particularly urgent issue for the EU. It required adoption of common regulatory provisions by all EU Member States and cooperation between those states to prevent market abuse from being initiated in one state and impacting on others.
1.29 The Directive required adoption of regulations to control market abuse that impose both negative and positive duties on both Member States and those involved in the financial markets. At the national level, the Directive required Member States to implement the following basic protections against market abuse:
• a requirement that any professional arranging transactions who has any reasonable suspicion that a transaction might constitute market abuse, notify the regulatory authority without delay;38
• regulations requiring those producing or distributing research to present it fairly and disclose any conflicts of interest;
• a requirement that issues of financial instruments inform the public of inside information as soon as possible;39 and
• a requirement that management of issuers (and any persons closely associated with them) disclose their dealing in the issuer’s shares or other financial instruments linked to the shares.40
(p. 11) 1.30 On individual financial market participants, the Directive also required Member States to impose both negative and positive duties. On the negative side, traders were required to avoid conduct that would constitute insider dealing or market abuse. On the positive side they were required to take steps to make the financial markets more transparent, such as:
1.31 An important element of this Directive was that its provisions applied to both financial and commodity derivatives, generally. The UK Government recognized that the implementation of the Directive in the UK required substantial changes to the UK’s market abuse regime. A full review and implementation of those changes was accordingly scheduled for late 2004 and early 2005.41 To effect the implementation of the Directive in the UK (which was supposed to have been completed by 12 October 2004), the Treasury and the FSA issued a Joint Consultation Paper on 18 June 2004 proposing changes to UK legislation and the FSA Handbook necessary to meet the requirements of the Directive. The FSA requested responses to the Consultation by 10 September 2004. It finalized the new provisions at the end of March 2005 and gave the industry three months to adjust. Despite the 12 October deadline, the UK market abuse regime implementing the Directive was not finally implemented until 1 July 2005.42
1.32 The Market Abuse Directive was repealed, and the Market Abuse Regulation (‘the Regulation’) came into effect, as of 3 July 2016.43
1.33 The central objective of the Regulation is to have integrated, efficient, and transparent financial markets conducted with integrity.44
1.34 However, the implementation of the Regulation brought major changes to the UK market abuse regime. These included the repeal and/or rearrangement of many key sections of the FSMA 2000 and the repeal and/or redrafting of many sections of the FCA Handbook.
1.39 The impact of the overlapping nature of these different regulatory schemes needs to be considered by anyone operating in international markets. The markets affected are not discrete national venues for the purchase and sale of financial products. All important financial and commodity markets operate internationally in developing sources of supply, in creating products for sale, and in finding customers. In our electronic age, even if a particular market participant is not physically present in a particular market location his activities can have a significant impact. Market abuse regulation seeks to control not only presence but effect as well. Consequently, the developing market abuse regulations apply to traders who are located far beyond the borders of the government implementing the regulatory schemes.
1.40 Although this book concentrates on UK regulation, it cannot ignore important international schemes that traders need to keep in mind. Therefore, some attempt will be made to outline the key issues which may make certain market abuse vulnerable to European and US regulatory action or private litigation in key jurisdictions, particularly in the US, which, after all, boasts the world’s largest economy. The aim of this is to make the consequences of trading in important international markets, and the risks of being charged with ‘market abuse’, a little less uncertain.
1.41 In the UK, there are other important levels of uncertainty. The original UK market abuse provisions of the FS Act 1986 were themselves a relatively new concept when first introduced and did not lead to an extensive record of enforcement.
(p. 13) Now, that has changed. The large number of market abuse cases that have arisen since 2010, and attracted severe regulatory, and even criminal, penalties constitute a significant body of precedents which will inform market participants about how they are expected to behave and where their behaviour crosses the line into market abuse.
1.43 First, the UK provisions against market abuse will be the principal focus of this book. This will discuss not only the UK market abuse provisions which have been in operation since FSMA but also the changes to that regulatory scheme which were brought about by the implementation of the Directives and Regulations. The fact that the UK has had a formal market abuse regime in operation for several years will assist in describing the reach and impact of UK regulation with some greater certainty than might otherwise be possible.
1.44 Second, the reasons for, and the impact of, the UK’s change of its enforcement philosophy from rule-based to ‘principles-based’ enforcement will be examined. It is clear the FCA is increasingly exercising its powers to address market abuse and send a clear message to the industry that market abuse will not be tolerated. In the years following the enactment of the market abuse provisions in the FSMA, the FSA/FCA has dealt with a variety of market abuse cases involving allegations such as misuse of information, insider dealing, and breaches of High Level Principles, and has recently increased the number of criminal cases involving insider dealing, misleading statements, and inaccurate or misleading disclosures.
1.45 UK regulators have also made significant technological advances in the fight against market abuse. There is a Digital Evidence Unit with a team of specialist investigators responsible for stripping and analysing computers, smartphones, and other electronic devices seized from suspected insider dealers.
1.46 The UK regulator has written and spoken a great deal about its move to principles-based enforcement. Consequently, this book will discuss how that relates to market abuse and how it changes the way in which market participants must defend their behaviour under regulatory scrutiny. It is interesting to note that the (p. 14) UK’s expressed commitment to principles-based financial enforcement has survived the impact of the global crash and calls for more specific regulation.45
1.47 Third, there is included a description of the reach of US jurisdiction over UK and European financial market activity with respect to ‘market abuse’ and ‘insider dealing’ regulations in the US. It is not a full examination of US law on these issues, but all international traders should be aware of the extent to which their activities may cross the line into US regulatory jurisdiction, because it is nearly impossible to avoid that overlap in contemporary financial trading. Indeed, many recent market manipulation cases involving international markets and international financial firms have resulted in joint US/UK investigations and cooperative imposition of penalties.
1.48 Insider dealing, market manipulation, monopolies, and conspiracies in restraint of trade have long been crimes and provided grounds for both regulatory action and private rights of action under US financial services law and regulation. In most jurisdictions outside the US, people are often surprised by the reach of US jurisdiction over these types of activities. It is worth remembering that a US Federal Court held that:
[A]ny market that is not exclusively a foreign market is part of US commerce.46
1.49 It is also worth remembering that one is not immunized from US law suits or regulatory action simply by the fact that the same area is covered by UK, EU, or other non-US financial services regulation. The US Supreme Court has held that where a party is subject to both:
If compliance with US (in that case, antitrust) law is not made impossible by British law; there is no excuse for not complying with US law.47
1.50 Hopefully, this will give readers an understanding of how far market abuse regulations reach, when conduct begins to cross the line from permitted into abusive (p. 15) market behaviour, how one must conduct trading to comply with the new anti-market abuse standards, and what enforcement actions can follow allegations of market abuse. The issues that will be discussed in the chapters of this book will include the following:
(a) What sort of ‘behaviour’ constitutes market abuse?
(b) Must the behaviour in question actually be market abuse or is it sufficient that it is ‘likely’ to constitute market abuse?
1.51 The intention of these sections is to give the reader a better understanding of what market behaviour is expected in the financial markets; what behaviour is unacceptable; and how the regulators in the UK, Europe, and the US intend to enforce separation of the two.
1.52 However, the regulation of any behaviour is not an exact science with clearly defined boundaries. It can probably only be understood as a mandated direction of travel, the exact route of which will have to be modified, as a result of unforeseen events and changing conditions as the journey progresses.
1.53 It may not be possible to know how market abuse regulation will ultimately develop. The paths and byways of market abuse regulation, as discussed in the following chapters, may be seen as diverse and complex. However, the regulators have given a clear message as to where they want to end up. Their goal is to have financial markets that are fair and efficient.
(p. 16) 1.54 It is certainly true that the terms ‘fair’ and ‘efficient’ are qualitative, ambiguous, and resistant to precise interpretation. What they mean will undoubtedly change as time goes on, and the markets evolve. However, no market participant would claim (at least publicly) that it is beneficial to the UK to have markets that are unfair and inefficient. Therefore, in order to avoid unfairness and inefficiency a certain amount of market advantage is going to have to be forfeited to compromise, cooperation, and consensus. In seeking to achieve this, the regulator has to maintain a difficult balance between encouraging opportunities for ‘fair’ profit and limiting opportunities for inequitable profit. This is no easy task. How the regulators intend to maintain this balance is the central subject of the following chapters.
1 Financial Services and Markets Act 2000 (the ‘FSMA’) Pt I, ‘The regulatory objectives’, ss 3–6. The four stated objectives of the Act are: market confidence, public awareness, the protection of consumers, and the reduction of financial crime. Also see the FSMA Explanatory Notes (‘FSMA Notes’), Pt I.
4 A variety of disciplinary powers were exercisable, for example, by the Life Assurance and Unit Trust Regulatory Organization (LAUTRO); the Financial Intermediaries Managers and Brokers Regulatory Association (FIMBRA); the Personal Investment Authority (PIA)—see in particular Chapters 9 and 10 of the PIA Handbook on the intervention and disciplinary powers of that SRO.
6 This is the first Principle for Business listed in PRIN, s 2.1 of the FCA Handbook. FCA Handbook, High Level Standards, Principles for Businesses, Reference Code PRIN, 2.1. NOTE: all references in this book to sections of the FSA Handbook will be by Reference Code and section number. For example, the section referred to in this footnote will be ‘PRIN 2.1’. Where appropriate, the section number will be followed by a ‘status icon’ letter. These are letters which the FCA uses in its Handbook to indicate whether a section is ‘R’, rules made under the FS Act s 24, or guidance, ‘G’. However, readers should assume that all FCA regulations are subject to continuous revision. For further information see the FCA website and/or contact the FCA.
7 Notably the failure to sustain convictions against directors and financial advisers for improper conduct in connection with a rights issue in the Blue Arrow case (R v Cohen  142 NLJ 1267); see, further, the failure to make criminal allegations stick against Ernest Saunders in relation to suspected wrongdoing in respect of Guinness plc’s take-over of Distillers plc (Saunders v United Kingdom  23 EHRR 313).
11 Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on Insider Dealing and Market Manipulation (market abuse) (OJ L96, 12.4.2003) (referred to below as the ‘Market Abuse Directive’, or simply the ‘Directive’).
17 Oddly enough, that phrase originally signalled a trader’s willingness to flout English law. In the eighteenth and nineteenth centuries, most transactions in which the promissor agreed to deliver certain assets to the buyer in the future were forbidden by statute and unenforceable under English law. Nevertheless, City traders entered into such illegal contracts all the time. Therefore the only hope that the agreement would be kept was that the promissor intended to keep his word. No enforcement remedy was available at law.
18 See footnote 3, above.
20 Financial Services Act 1986, s 59; see further: Injunction against Mr Sahib Saini, FSA Press Release, 17 March 1999, FSA/PN/027/1999; Disciplinary Action against Richard Philip King, SFA Board Notice 589, 11 June 2001. King pleaded guilty to three charges of insider dealing under the Criminal Justice Act 1993, s 52.
46 Judge William C. Conner, US District Judge, Southern District of New York in the Transnor case. Transnor v BP North America Petroleum, 738 F. Supp. 1472 (SDNY 1990). ‘The Transnor case was a watershed event for energy derivatives and the CFTC’s [US Commodity Futures Trading Commission—the principal US regulator for derivatives] approach to OTC [“over-the-counter” or off-exchange] derivative products, upholding on a motion for summary judgment a complaint contending that Brent oil contracts were futures contracts subject to the anti-manipulation provisions of the CEA [the US Commodity Exchange Act].’ Susan C. Ervin, ‘CFTC Regulation of Energy Derivatives: An Overview’ (American Bar Association, Section on Business Law, Committee on Futures Regulation: ‘The Aftermath of Enron: More Regulation or Continued Deregulation’, 13 August 2002), p. 2.