Upper Tribunal Tax and Chancery Chamber

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

Fecha: 31-Ene-2025

Mr Lopez

Mr Lopez

892.

The Authority applied its five-step framework as follows:

(1)

The Authority has not identified any financial benefit that Mr Lopez derived directly from the market abuse. Step 1 is therefore £0.

(2)

The figure at Step 2 is dependent on whether or not the market abuse was referable to the individual’s employment, and will be the greater of a figure based on “relevant income”, a profit multiple, and, for market abuse cases which the Authority assesses to be seriousness level 4 or 5, £100,000.

(a)

The relevant period for calculating Mr Lopez’s relevant income is the 12-month period ending on 29 July 2016, and his relevant income for that period was £143,089, calculated on a pro rata basis.

(b)

Mr Lopez intended to mislead other market participants, he knew that the misleading orders would give false or misleading signals to other market participants as to the supply of or demand for Futures, and he knew that placing misleading orders constituted market abuse as a result of his experience in the market and the training that he had undertaken. This was repeated on multiple occasions in the Relevant Period. The Authority considered that he deliberately committed market abuse.

(c)

The Authority considered the following level 4 or 5 factors to be relevant: the market abuse was committed on multiple occasions during the Relevant Period; and the market abuse was committed deliberately or recklessly.

(d)

The Authority considered the following level 1, 2 or 3 factors to be relevant: Limited profits were made or losses avoided, either directly or indirectly. However, Mr Lopez aimed to execute his genuine orders more efficiently and manage better the risk on his book as a result of the placement of his misleading orders. This would have improved the performance of the Desk which was a factor taken into account in determining the bonus he was to receive.

(e)

The Authority also took into account that: Mr Lopez is an experienced industry professional, holding the Certified Role of working in a Client Dealing Function, and before that had been an Approved Person, first holding a Controlled Function in 2006; and the Authority usually expects to assess deliberate market abuse as seriousness level 4 or 5.

(f)

The Authority considered the seriousness to be level 4, which means the Step 2 figure is the higher of (i) 30% of Mr Lopez’s relevant income of £143,089, ie £42,926, (ii) a profit multiple of 3 applied to his financial benefit of £0, ie £0, and (iii) £100,000. Step 2 is therefore £100,000

(3)

The Authority concluded there are no aggravating or mitigating factors such as to justify an adjustment to the Step 2 figure. Step 3 is therefore £100,000.

(4)

The Authority considered this represents a sufficient deterrent to Mr Lopez and others, and so has not increased the penalty at Step 4.

(5)

No settlement agreement has been reached, and Step 5 is therefore £100,000.

893.

Mr Jaffey invited the Tribunal to find that the allegations of market abuse were not substantiated such that the reference should be remitted to the Authority with directions that no penalty be imposed. However, Mr Jaffey did not make any submissions as to the level of the penalty that should be imposed if the Tribunal was to find that the allegations were made out.

894.

We have considered the Authority’s approach to the determination of the penalty to be imposed on Mr Lopez, including in the light of our conclusions as to the approach to the determination of the penalty to be imposed on Mr Sheth. We adopt it ourselves.

895.

The Tribunal determines that it will be appropriate for the Authority to impose a financial penalty of £100,000 on Mr Lopez.