FCA bans ex-Stifel trader Adrian Geoffrey Horn for wash trading
Adrian Geoffrey Horn executed the wash trades to ensure that a minimum number of shares were traded in McKay each day, which he believed was a requirement to ensure that McKay remained in the FTSE All Share Index.
The FCA has fined Adrian Geoffrey Horn, a former market-making trader at Stifel Nicolaus Europe Limited, £52,500 for ‘wash trading’ and banned him from any regulated activity.
The financial watchdog in the UK found that Mr. Horn engaged in market abuse by executing trades with himself in the share McKay Securities, a practice known as ‘wash trading’.
Mr. Horn executed 129 wash trades during the period 18 July 2018 to 22 May 2019, where he would enter buy orders in McKay shares – a corporate client of Stifel – that traded with his existing sell orders (and vice versa).
Mark Steward, Executive Director of Enforcement and Market Oversight, said: “Mr. Horn’s manipulative trading was serious. Wash trading is a form of manipulation which undermines market efficiency and integrity.
“The FCA has also developed ways to detect this type of manipulation as well as other forms of market abuse and, as this case demonstrates, we will take robust action against such abuse”, Mr. Stwward added.
The Financial Conduct Authority stated that Mr. Horn’s motive for “executing the wash trades was to ensure that a minimum number of shares were traded in McKay each day, which he believed was a requirement to ensure that McKay remained in the FTSE All Share Index.”
Assisting McKay to remain in the FTSE All Share Index, would benefit the relationship between Stifel and its client, he believed. According to the regulator, Mr. Horn cooperated with the investigation and “made significant admissions” early on. For that, the penalty was reduced by 25% and he received a further 30% settlement discount.
The FCA considers that the fine and the prohibition imposed reflect the serious nature of the breach set out in the Final Notice and should act as a deterrent to other market participants.
“Through his wash trading, Mr. Horn gave false and misleading signals to the market as to demand for and supply of McKay shares. His actions resulted in other market participants seeing what they believed to be legitimate trades in McKay occurring. In addition, the wash trades artificially inflated end-of-day trading volumes reported to the market. Mr. Horn was aware of the risk that his actions might constitute market manipulation but recklessly went ahead with those actions anyway”, said the FCA announcement.
Adrian Geoffrey Horn’s £52,500 fine and ban from regulated activities for ‘wash trading’ was the FCA’s first fine in 2021. The final notice refers to breaches of MAR and FIT relating to Market Abuse in the Trading Firm sector.