Winterflood faces £4m fine by FSA

The City stockbroking firm Winterflood Securities is facing a fine of £4m by the Financial Services Authority (FSA) for market abuse.

The firm is appealing against the decision to the Financial Services and Markets Tribunal.

The FSA has refused to comment on its reasons until the tribunal's ruling.

However, Winterflood has been fined because of improper dealings in 2004 in the shares of a small company, FEI, on the Alternative Investment market.

At the time, Winterflood was the market maker in shares in FEI and executed most of the trades to which the FSA has now taken exception.

"The allegation against Winterflood stems from trading by third parties in 2004 in shares of FEI, an AIM listed stock," said Close Brothers, the group which owns Winterflood.

"The FSA allege that Winterflood failed to have appropriate regard to warning signs and failed to ask questions about the propriety of the third-party trades in FEI executed by Winterflood, and thereby committed market abuse.

"It is not alleged that Winterflood or its traders deliberately committed market abuse," it added.

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