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Financial Times: A light touch or perhaps a soft one

By Chris Hughes
Published: August 16 2007 03:00 | Last updated: August 16 2007 03:00

The Financial Services Authority likes to be seen as a light-touch regulator, but its record on bringing miscreants to book leaves it vulnerable to being labelled a soft-touch one as well.

The City regulator regularly fines companies and individuals for misdemeanours and sloppy standards, such as misleading financial adverts.

Some fines are large. In 2005, it fined Citi £14m for the “Dr Evil” trade, which caused turmoil in the European bond market to the bank’s gain. It fined Shell £17m in 2004 for mis-stating its oil reserves.

But the FSA has made it a public priority to clamp down on abuse by City professionals. Its record here is patchy.

Last year it fined Philippe Jabre, a trader at hedge fund GLG Partners, for misuse of inside information, and David Maslen, a trader at Deutsche Bank, for mishandling a share issue.

Contrast this with US regulators’ clampdown on Wall Street’s abuses, such as biased investment research, during the technology boom.

Investment banks agreed to fines of $1.4bn (£700m) in a settlement led by Eliot Spitzer, then New York attorney-general, and rubber-stamped by the Securities and Exchange Commission.

The SEC can also point to many insider trading cases, with seven announced this year.

For its part, the FSA has often said that it should be judged for preventing abuses rather than punishing them.

Copyright The Financial Times Limited 2007 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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