Market abuse: Statutory exceptions and defences — What protection is available?
| Published date | 01 February 2001 |
| Pages | 124-135 |
| DOI | https://doi.org/10.1108/eb025068 |
| Date | 01 February 2001 |
| Author | Jonathan Herbst,Katie McCaw |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 9 Number 2
Market abuse: Statutory exceptions and
defences — What protection is available?
Jonathan Herbst and Katie McCaw
Received: 23rd January, 2001
Simmons & Simmons, 1 Ropemaker Street, London EC2Y 9SS; tel: (020) 7825 4069;
e-mail: jonathan.herbst@simmons-simmons.com
Jonathan Herbst is a senior associate in
the Financial Services Group at Simons &
Simmons who advises on financial
ser-
vices regulatory matters. In January 2000,
he completed an 18-month secondment at
the Financial Services Authority where he
was part of a small team led by the Gen-
eral Counsel advising on the Financial
Services and Markets Act and the FSA's
new handbook.
Katie McCaw is currently a Senior Support
Researcher in the Banking Department at
Norton Rose, specialising in banking law,
banking and financial services regulation
and electronic commerce. Katie was
for-
merly a Professional Support Lawyer in
the Financial Markets Department at Sim-
mons & Simmons, tracking the develop-
onto the statute books.
ABSTRACT
The new
offence
of market abuse was
introduced
(the Act). The Financial Services Authority
(FSA) is
required under
s.
119 of the Act to issue
a
code containing
'guidance' on market
abuse
(the
Code).
In 1998, the FSA published its
first
con-
sultation on a draft Code of Market Conduct
which set out the FSA's proposed market abuse
regime. Responses to that consultation formed the
basis for
preparation
of a
second consultation
and
draft Code of Market Conduct, issued in July
2000.1 More recently, Consultation Paper 16
introduced the FSA's Supplement to the Draft
Code which deals with some additional elements
of the market
abuse
regime.
INTRODUCTION
The defences to an action for market abuse
fall under four broad heads. First, there are
the safe harbours. Secondly, there are what
one might call statutory defences under the
Act and Code which are not safe harbours
but are relevant in establishing that there
has been no market abuse. Thirdly, the
more subtle ways in which the definitions
used in the market abuse regime can be
attacked in order to build a defence argu-
ment and finally, there are the general argu-
ments which could be run in the Financial
Services and Markets Tribunal2 or on an
appeal on a point of law in the courts.
This paper deals with some of the issues
relating to the defences built into the
market abuse regime. First, the statutory
architecture will be outlined, as this has a
key impact on the way on which the
defences work and secondly, the key gen-
eral themes which arise in relation to the
defences will be considered. Finally, this
paper takes a practical approach to the
defences and looks at the arguments one
might run in a defence strategy.
STATUTORY STRUCTURE
Safe harbours
There are two safe harbours at statutory
level. First, behaviour does not amount to
market abuse if it conforms with an FSA
Journal of Financial Regulation
and Compliance, Vol. 9, No. 2,
2001, pp. 124-135
© Henry Stewart Publications,
1358-1988
Page 124
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