DAC Beachcroft Wealth & Asset Management Alert: FCA thematic review – asset management firms and the risk of market abuse
Published 26 March 2015
The FCA has recently reported on the findings from its thematic review into how asset management firms control the risk of committing market abuse.
The FCA found that whilst firms had put in place some practices and procedures to control the risk of market abuse, it was only in a small number of firms that the procedures were (what the FCA considered) "comprehensive".
Market abuse is an area where firms are understandably nervous. The FCA has shown its appetite for enforcement action. In recent years we have seen fines of hundreds of thousands of pounds against individuals at top City firms which no doubt had extensive practices and procedures in place.
Firms should review their systems and controls on market abuse to ensure they operate effectively and cover all material risks. The FCA said, in particular, firms need to pay more attention to the possibility of receiving inside information through all aspects of the investment process (and not to consider only formal wall crossings). Post-trade surveillance was also highlighted as an area for improvement.
Read the full alert.