The FCA issued decision notices last week for three individuals in connection with market abuse by Rameshkumar Goenka (which earned Goenka a fine of over $6.5 million and restitution of $3.1 million in 2011). The individuals concerned were David Davis, a senior partner and the compliance officer of Paul E Schweder Miller & Co, Vandana Parikh, a broker at the same firm, and Tariq Carimjee of Somerset Asset Management. As well as fines totalling over £200,000, Davis has been banned from holding Significant Influence Functions, and Carimjee banned from performing any role in regulated financial services. Carimjee has appealed his decision to the Upper Tribunal.

The market abuse involved trading in Global Depository Receipts (GDRs), and was planned but not carried out with Gazprom GDRs and then actually carried out with Reliance GDRs. Through high volumes of trades during the LSE’s closing auction, Goenka hoped to manipulate the price of the securities, raising it to an artificially high level, thereby avoiding a loss on a structured product which he owned. This was carried out by Parikh, and allowed Goenka to avoid a loss of $3.1 million.

The FCA found that, although neither Parikh nor Davis knew that Goenka had an underlying structured product, both had failed to act with due skill, care and diligence. Parikh suspected that Goenka had such a structured product, but explained how the correct pattern of trading could manipulate the market without recognising the risk, and did not inform her compliance officer at the time of the planned Gazprom trading. She later raised concerns with Davis, who monitored the Reliance trading but did not challenge it, allowing the trades to proceed.

In the case of Carimjee, the FCA found that, despite suspecting that he held linked structured products and intended to manipulate the market, he had introduced Goenka to the firm of brokers for the specific purpose of trading in closing auctions and discussed and assisted with the trades.

Final decision notices can be found here for Davis, Parikh and Carimjee, and also for Goenka.