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Tribunal asks FCA to reconsider market abuse case

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The Upper Tribunal (Tribunal) has released its decision in relation to Tariq Carrimjee of Somerset Asset Management LLP (Somerset).  The Tribunal upheld the FCA’s decision to impose a penalty of GBP 89,004 and found that Carrimjee’s failings were serious and that a significant financial penalty was appropriate.

The Tribunal’s decision was issued on 6 March 2015 after 3 days of hearing during September 2014.  It remains open to the parties to appeal this judgment.  This decision follows the Final Notices issued to Goenka, Mrs Parikh and Davis in relation to the same matter.

Carrimjee, an investment and fund manager, held senior positions at Somerset at the relevant time and was responsible for compliance oversight.  The Tribunal found that Carrimjee failed to act with due skill, care and diligence in failing to escalate the risk that his client, Rameshkumar Goenka, might have been intending to engage in market manipulation, and that this risk should have been apparent to Carrimjee.   It did not uphold the FCA’s decision that Carrimjee had acted without integrity.

This is the first time since changes were made to the Tribunal’s powers that the Tribunal has remitted part of a case back to the FCA to reconsider and reach a decision as to the extent of any prohibition in accordance with the findings of the Tribunal.

In November 2011 Goenka was fined $9,621,240 (approximately GBP 6 million) for market abuse.

Davis, the senior partner and compliance officer at Paul E Schweder Miller & Co and Vandana Parikh, the broker at the same firm who executed the trades, were fined GBP 70,258 and GBP 45,673 in July 2012 and August 2013, respectively.  The FCA concluded that Parikh failed to act with due skill, care and diligence by explaining the process of manipulation to Goenka without recognising the risk that this posed and without proper challenge or enquiry as to his intentions.

The relevant securities were Global Depository Receipts (GDRs). These are parcels of shares in a particular company which are listed and traded on international exchanges separately from the company’s shares. In publishing the Notices, the FCA is not in any way criticising Reliance or Gazprom.

Author: Editor

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