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ENF 14.5 Factors determining whether the FSA may impose a financial penalty in market abuse cases

ENF 14.5.1G

The factors which the FSA may take into account when deciding whether either of the two conditions in ENF 14.3.2 G is met, include, but are not limited to:

  1. (1)

    in relation to whether the person concerned reasonably believed that his behaviour did not amount to market abuse or requiring or encouraging

    1. (a)

      whether, and if so to what extent, the person concerned took reasonable precautions to avoid engaging in market abuse or requiring or encouraging (see (2));

    2. (b)

      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;

    3. (c)

      whether the FSA has issued any guidance on the behaviour in question and if so, the extent to which the person sought to follow that guidance (see the Reader's Guide part of the Handbook regarding the status of guidance);

    4. (d)

      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 the SARs) or any relevant codes of conduct or best practice;

    5. (e)

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

    6. (f)

      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;

  2. (2)

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

    1. (a)

      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);

    2. (b)

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

    3. (c)

      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;

    4. (d)

      whether the FSA has issued any guidance on the behaviour in question and if so, the extent to which the person has sought to follow that guidance (see the Reader's Guide part of the Handbook regarding the status of guidance); and

    5. (e)

      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 the SARs) or any relevant codes of conduct or best practice.

ENF 14.5.2G

The list in ENF 14.5.1 G is not exhaustive, and there may be other factors that are relevant in establishing the conditions referred to in ENF 14.3.2 G, depending on the facts of each case.