‘Wash Trades’ Lead to Market-Abuse Fine for Ex-Stifel Trader

(Bloomberg) -- U.K. financial regulators fined and banned a former senior trader at Stifel Nicolaus Europe Ltd. for market abuse after he was found to have manipulated a client’s stock.

Adrian Horn was fined 52,500 pounds ($73,000) after the Financial Conduct Authority determined he was effectively trading with himself. Horn carried out the practice, known as “wash-trading,” to try to boost activity and ensure the client remained in the FTSE All Share Index, the FCA said.

“Horn’s manipulative trading was serious,” Mark Steward, executive director of enforcement and market oversight at the FCA, said in a statement Thursday. “Wash trading is a form of manipulation which undermines market efficiency and integrity.”

The FCA has been cracking down on various forms of market abuse after a period of relative quiet. It fined a London trader 100,000 pounds for giving misleading signals about his trading in September, the first major penalty by the regulator in a market abuse case since 2017.

Horn, who agreed to cooperate with the regulator, was aware of the risk that the trading could be seen as market manipulation, the FCA said. He didn’t reply to messages seeking comment.

Stifel said in a statement that it notified the FCA about Horn’s trades and cooperated with the probe.

Horn, an experienced trader who worked for various financial firms since 1985, carried out the trading by placing orders that matched his sell orders for 10 months through May 2019, the FCA said. He wanted to ensure that a minimum number of shares appeared to change hands so as to keep the stock, McKay Securities Plc, a corporate client, in the FTSE index.

In total Horn placed 129 wash trades, which typically accounted for almost 40% of the volume in McKay shares on each given day.

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