R (on the application of Fleurose) v Securities and Futures Authority Ltd and another
| Date | 01 April 2001 |
| Pages | 373-380 |
| DOI | https://doi.org/10.1108/eb025090 |
| Published date | 01 April 2001 |
| Author | J Morrison,Joanna Gray |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 9 Number 4
Regulatory and legal commentary
Human rights challenge to SFA
disciplinary procedures
R (on the application of Fleurose) v
Securities and Futures Authority Ltd
and another
Administrative Court: Morrison J
Date of Judgment: 26th April, 2001
Joanna Gray
University of Northumbria at Newcastle, School of Law, Sutherland Building, College Street,
Newcastle upon Tyne NE1 8ST; tel: +44 (0)191 227 3563; e-mail: joanna.gray@unn.ac.uk
FACTS
The claimant, Mr Fleurose had been
employed by JP Morgan Securities Ltd, a
member of the Securities and Futures
Authority (SFA), as a senior cash arbitrage
trader. The London Stock Exchange (LSE)
carried out an investigation into allegations
that, on 28th November, 1997 he had,
acting with his immediate superior,
manipulated the FTSE 100 index in order
to ensure that JP Morgan Ltd did not have
to make a payment under a binary option.
Under the terms of the option JP Morgan
Ltd would have had to pay out if both the
FTSE 100 Index and the Standard & Poors
(S&P) Index were higher at the end of the
month than at the beginning. On 28th
November, the final day of trading, the
S&P Index was significantly higher than its
opening level but the FTSE 100 index was
near the critical level at or below which JP
Morgan Ltd would be relieved of its
obligation to pay approximately £475,000
under the option. The applicant entered a
wave of automated 'sell' orders in stocks in
the leading five companies of the FTSE
100 list in the final eight minutes of trading
of 28th November. The total value of
those orders amounted to £11,247,525 and
the 'sell' orders entered in the final six sec-
onds of trading were at stated prices well
below the market levels at the time. The
FTSE 100 Index reacted by falling below
the critical level. An immediate investiga-
tion into the sudden late fall in the Index
was launched by the London Stock
Exchange which attributed it to trading
activity by JP Morgan Ltd. The firm con-
ducted its own investigation and acknowl-
edged that it had, through the activities of
the Equity Derivatives Trading group (Mr
Fleurose's group) breached Rule 2.10 of
the London Stock Exchange Rules which
prohibited member firms from doing an
Journal of Financial Regulation
and Compliance, Vol. 9, No. 4,
2001, pp. 373-384
© Henry Stewart Publications.
1358-1988
Page 373
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