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 Sheth

Mr Sheth

896.

The Authority applied its five-step framework as follows:

(1)

The Authority has not identified any financial benefit that Mr Sheth 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. The Authority usually expects to assess market abuse committed deliberately as seriousness level 4 or 5.

(a)

The relevant period for calculating Mr Sheth’s relevant income is the 12-month period ending on 29 July 2016, and his relevant income for that period was £82,478.

(b)

Mr Sheth 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. 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 Sheth 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 Sheth is an experienced industry professional, holding the Certified Role of working in a Client Dealing Function, and before that had been an Approved Person; 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 Sheth’s relevant income of £82,478, ie £24,743, (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 Sheth 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.

897.

Mr Bailin made submissions on the amount of the penalty. He did not make any challenge to Steps 1, 3, 4 and 5 in the Authority’s calculation of the penalty. The application of Step 2, and the imposition of the minimum penalty of £100,000 had, he submitted rendered the proposed penalty disproportionate and unjust and unfair. The purpose of the financial penalty is to deter Mr Sheth and the wider public from committing market abuse; the primary purpose is deterrence, not penal. Mr Bailin submitted, as explained further below, that the Tribunal should either depart from the minimum penalty or assess the conduct as seriousness level 3.

898.

The Tribunal adopts the Authority’s five-step penalty framework.

Step 1

899.

We have not identified any financial benefit that Mr Sheth derived directly from the market abuse, so Step 1 is £0.