UT (Tax & Chancery) UT-2022-000134 UT-2022-000135 UT-2022-000137 - [2025] UKUT 00214 (TCC)

UT (Tax & Chancery) Case Number: UT-2022-000134
UT-2022-000135
UT-2022-000137

FINANCIAL SERVICES – market abuse – placing and cancellation of “large” orders in BTP Futures on the Eurex Exchange which overlapped with small orders placed by the applicants on the opposite side – whether “large” orders give false or misleading impression or signal to other market participants – whether placed as part of an abusive scheme to facilitate execution of small orders or a legitimate trading strategy being pursued – held – references against prohibition orders dismissed – amount of penalties determined

Hearing venue: The Rolls Building

London

EC4A 1NL

Judgment date: 01 July 2025

Before

JUDGE JEANETTE ZAMAN

MEMBER GARY BOTTRIELL

MEMBER PETER FREEMAN

Between

(1) MR JORGE LOPEZ GONZALEZ

(2) MR POOJAN SHETH
(3) MR DIEGO URRA

Applicants

and

THE FINANCIAL CONDUCT AUTHORITY

Respondent

Representation:

For Mr Urra, Andrew George KC and Ava Mayer, counsel, instructed by Mishcon de Reya LLP

For Mr Lopez, Ben Jaffey KC and Celia Rooney, counsel, instructed by Stephenson Harwood LLP

For Mr Sheth, Alex Bailin KC and Jason Mansell, counsel, instructed by Bryan Cave Leighton Paisner LLP

For the Authority: Sharif Shivji KC, Lara Hassell-Hart and Nicholas Wright, counsel, instructed by The Financial Conduct Authority

TABLE OF CONTENTS

Table of Contents 1

Introduction and summary 3

Decision Notices and Authority’s amended statements of case 4

Recklessness 10

Traders’ Replies and outline of trading strategies relied upon 11

Relevant legal principles 11

Market Abuse 12

Dishonesty 15

Role of the Tribunal 15

Non-disciplinary references 16

Disciplinary references 17

Burden and Standard of proof 17

Evidence including witnesses who had not been called, information that is no longer available and relevance of delay 18

Outline of evidence before the Tribunal 18

Pace of Authority’s investigation and particularisation of its case 20

Lack of information that would have been available to the Traders during the Relevant Period 22

Passage of time, memory and witness evidence 27

Potential witnesses who were not called by the Authority 30

Approach of the Tribunal 36

Findings of fact 37

EGBs, market making, BTPs and BTP Futures 37

The Traders – roles at MHI and experience 39

MHI and the EGB Trading Desk 41

Eurex Letter 48

Interviews with Compliance 50

Investigation by MHI Compliance 51

MHI disciplinary process 55

Interviews by the Authority 55

Traders’ explanations of rationale for the Large Orders 56

Trading Activity of the Traders in the Relevant Period 59

Trading Activity of the Traders outside the Instance Pool 64

Trading Activity of other participants in the market 65

Market abuse 66

Evaluation – Whether Large Orders are likely to impact the market 66

Tribunal’s assessment of the Experts 67

Summary of evidence of Mr Creaturo 69

Market liquidity 70

Whether Large Orders may influence other market participants 73

Conclusions on market impact 75

Evaluation – Whether traders committed market Abuse 77

Criteria used to identify the Instance Pool 80

The Trading Strategies – contemporaneous explanations 84

Mandate 87

Information Discovery Strategy – plausibility 89

Information Discovery Strategy - operation 95

Conclusions on the Information Discovery Strategy 104

Anticipatory Hedging Strategy – plausibility 104

Anticipatory Hedging Strategy – operation by Mr Lopez 113

Conclusions on the Anticipatory Hedging Strategy 117

Placing of concurrent Large Orders 118

Collaboration 121

Plausibility of Authority’s case that the Traders conducted an abusive scheme 130

Trading Activity of the Traders in the Relevant Period 138

Conclusions on Market Abuse 147

Prohibition orders 160

Penalties 161

Step 1: Disgorgement 162

Step 2: The seriousness of the breach 162

Step 3: Mitigating and aggravating factors 163

Step 4: Adjustment for deterrence 164

Step 5: Settlement Discount 164

Authority’s determination of the penalties to be imposed 164

Assessment of the financial penalty 164

Mr Urra 165

Mr Lopez 168

Mr Sheth 169

Disposition 172

Directions 172

Appendix 1 174

Statement of agreed background facts 174

The Cash BTP Market 174

RFQs and cash trades 175

Hedging and trading BTP futures on EUREX 175

MHI and the EGB Desk 176

Glossary 178

Appendix 2 182

DECISION