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Winterflood loses appeal over FSA fine

WINTERFLOOD Securities, one of the City’s most prominent market-making firms, yesterday lost its appeal case against £4.25m of market abuse fines levied on the firm and two of its traders two years ago by the Financial Services Authority (FSA).

Winterflood, which is owned by Close Brothers, will stump up £4m, while traders Stephen Sotiriou and Jason Robins will pay £200,000 and £50,000 fines respectively.

The FSA’s decision to impose the fines came in June 2008, when the regulator found Winterflood had played a “pivotal role” in an illegal share ramping scheme relating to Aim-listed Fundamental-E Investments (FEI).

The City watchdog said the firm had used rollovers to create a distortion in the market for FEI shares in 2004, netting Winterflood around £900,000.

Winterflood, Sotiriou and Robins had already unsuccessfully challenged the FSA’s findings at a tribunal last year, before taking the case to the Court of Appeal.

Margaret Cole, the FSA’s director of enforcement, said: “Winterflood allowed highly profitable trades to go ahead despite clear warnings that something was amiss. Their actions led to serious losses for investors and damaged market confidence. This was well below the standards expected of a leading market maker.”

Close Brothers said in a statement that the decision would not impact the group’s finances since the fines had been fully provided for by Winterflood in previous years.

“It was not alleged, and there is no finding, that Winterflood or its traders deliberately or knowingly committed market abuse,” the firm added.

The firm was founded by veteran Brian Winterflood, now its life president, in 1988.