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DEPP 6.3 Penalties for market abuse

DEPP 6.3.1G

Section 123(2) of the Act states that the FCA1 may not impose a penalty on a person if there are reasonable grounds to be satisfied that:

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  1. (1)

    the person concerned believed, on reasonable grounds, that his behaviour did not amount to market abuse or requiring or encouraging; or

  2. (2)

    the person concerned took all reasonable precautions and exercised all due diligence to avoid engaging in market abuse or requiring or encouraging.

DEPP 6.3.2G

The factors which the FCA1 may take into account when deciding whether either of the two conditions in DEPP 6.3.1 G are met include, but are not limited to:

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  1. (1)

    whether, and if so to what extent, the behaviour in question was or was not analogous to behaviour described in the Code of Market Conduct (see MAR 1) as amounting or not amounting to market abuse or requiring or encouraging;

  2. (2)

    whether the FCA1 has published any guidance or other materials on the behaviour in question and if so, the extent to which the person sought to follow that guidance or take account of those materials (see the Reader's Guide to the Handbook regarding the status of guidance.) The FCA1 will consider the nature and accessibility of any guidance or other published materials when deciding whether it is relevant in this context and, if so, what weight it should be given;

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  3. (3)

    whether, and if so to what extent, the behaviour complied with the rules of any relevant prescribed market or any other relevant market or other regulatory requirements (including the Takeover Code) or any relevant codes of conduct or best practice;

  4. (4)

    the level of knowledge, skill and experience to be expected of the person concerned;

  5. (5)

    whether, and if so to what extent, the person can demonstrate that the behaviour was engaged in for a legitimate purpose and in a proper way;

  6. (6)

    whether, and if so to what extent, the person followed internal consultation and escalation procedures in relation to the behaviour (for example, did the person discuss the behaviour with internal line management and/or internal legal or compliance departments);

  7. (7)

    whether, and if so the extent to which, the person sought any appropriate expert legal or other expert professional advice and followed that advice; and

  8. (8)

    whether, and if so to what extent, the person sought advice from the market authorities of any relevant prescribed market or, where relevant, consulted the Takeover Panel, and followed the advice received.