The Court of Appeal ruled in favour of the FCA that Canadian trading platform Swift Trade Inc was guilty of market abuse. In 2011, the FSA fined Swift Trade Inc £8m for market abuse. It said Swift Trade Inc had engaged in a form of price manipulation known as ‘layering’. Layering is a means of manipulating supply and demand in the market involving the placing of large orders which are never finally executed, in order to take advantage of price movements.

Swift Trade Inc referred the decision to the Upper Tribunal, which found in favour of the FCA in January 2013. Swift Trade Inc subsequently took the case to the Court of Appeal. The Court upheld the FCA fine and the ruling of the Upper Tribunal because it agreed that the layering activity related to qualifying investments under FSMA. Between January 1, 2007 and January 4, 2008, Swift Trade Inc deliberately filed false orders by way of contracts for difference to the London Stock Exchange in order to manipulate the price of individual securities. It then profited by buying or selling those securities at the new manipulated price, netting the firm in excess of £1.75m, according to the regulator.

The Court of Appeal also considered whether the English proceedings (the Decision Notice issued by the FSA and subsequent hearings) were valid as a matter of English law. This involved interpretation of a question of fact as to whether, under Canadian law, the relevant company (Swift Trade Inc) existed at the time of the Decision Notice and the reference to the Upper Tribunal. The majority in Swift Trade Inc did not seek to interfere with the Upper Tribunal’s finding of fact, based on evidence from a Canadian lawyer, that the effect of the Canadian statutory provisions was to “preserve the otherwise dissolved company” for limited purposes which include proceedings of this kind, on the basis that this was a conclusion to which the Tribunal was entitled to reach.

View Canada Inc (formerly t/a Swift trade Inc) and the Financial Conduct Authority (formerly the Financial Services Authority) [2013] EWCA Civ 1662, 19 December 2013