Swift Trade fined £8m for market abuse A defunct day-trading company controlled by a prominent Canadian entrepreneur must pay an £8m fine for market abuse for moving share prices on the London Stock Exchange through rapidly placing and cancelling orders on thinly traded companies, a London tribunal has ruled. The ruling against Peter Beck's Swift Trade represents a significant and complete victory for the Financial Services Authority, which had sought to penalise the company for "layering" - market slang for using multiple orders to move share prices in a particular direction. A finding against the watchdog could have undermined the FSA's recent efforts to enforce its strict market abuse rules on overseas investors who dabble in the UK markets. "It is as serious a case as might be imagined," the Upper Tribunal, which hears appeals from the FSA disciplinary process, wrote in its decision. The conduct of which Swift Trade was guilty amounted to a cynical course of intensive manipulation of the LSE. "Left to ourselves, we might well have concluded that £8m was insufficient," the decision continued. The FSA said day traders used Swift Trade's facilities to place and cancel tens of thousands of trades between January 2007 and January 2008, sparking complaints from other market participants and netting Swift Trade more than £1.75m, its share of the profits. Swift Trade also switched brokers after the LSE complained about the trading patterns. Michael von Pommern-Peglow, the attorney who represented Swift and Mr Beck before the tribunal, called the decision "very disappointing" and said they were considering an appeal. "If the decision stands, CFD [contract for difference] trading by non-UK regulated firms will effectively become regulated by the FSA through the back door," he said. Tracey McDermott, FSA enforcement director, called the Swift Trade case "a particularly cynical case where a business model was based on market abuse . . . layering is abusive. We expect brokers and [direct market access providers] . . . to monitor their clients" trading activity closely," she said. The three-member panel rejected claims that the watchdog did not have jurisdiction over Swift Trade because it was Canadian and placed its orders through the UK arms of first Merrill Lynch and then Penson. The ruling also confirmed the FSA's power to bring market abuse cases based on profits made from trading in swaps and contracts for difference rather than directly in equities. "Such blatant buccaneering market abuse by a fringe player is an easy target for the FSA," said Simon Morris, regulatory partner with law firm CMS Cameron McKenna. But it is also gaining a reputation as a regulator prepared to tackle the complex and difficult cases involving bigger names. Swift Trade has previously paid C$400,000 to the Ontario Securities Commission for compliance and control failings. The US Securities and Exchange Commission last year banned Mr Beck from the US securities industry for two years over allegations that he ignored red flags that day traders at another firm he founded were engaging in layering.