Enforcement and Litigation update – Key developments including the FCA prosecution of "Tramline Trader" and speech on market abuse
Insight
Financial Institutions 360: Regulatory update
Read other sections of this edition of the Financial Institutions 360:
Enforcement
Confiscation order
On 14 May, the FCA announced that it had secured confiscation orders of over £300,000 against three men who had been convicted of conspiracy to defraud. They were imprisoned for a total of over 24 years in 2023. They had been running an investment fraud in which they tricked victims into investing in binary options (a type of fixed odds betting which is now banned) and then used the money to fund their lifestyles. A fourth defendant had been separately convicted of offering binary options without FCA authorisation, but was not subject to the confiscation order.
The FCA may now apply for a separate order for compensation for the victims.
Prosecution for insider dealing
On 9 May, the FCA announced that two brothers had pleaded guilty to insider dealing. They had been working as day traders using their own accounts and through companies which they controlled.
Tramline Trader prosecuted by FCA
On 15 April, the FCA announced that it had charged a man with carrying on an unauthorised business and dishonestly misleading investors. Mr John Burford (who is 85 and once worked at NASA), was also known as the ‘Tramline Trader’ and was the sole director of Financial Trading Strategies Limited. Through its website, he promoted paid subscription services involving the provision of daily trade alerts which gave advice on trading opportunities as well as investments in certain funds. Membership of the VIP Traders Club cost £995 a year, and there was a further £595 fee for the daily updates. Mr Burford is alleged to have misrepresented both the value of the funds and his trading losses. Mr Burford has been charged with various offences including a breach of s.19 FSMA.
PRA fine to George Hambro
On 2 April 2025, the PRA published a final notice to George Hambro, a former NED of Wyelands Bank plc, fining him £72,000 for breaching PRA Individual Conduct Rule 2 (requirement to act with due skill, care and diligence). This is part of a wider enforcement case against Wyelands Bank relating to its prudential failings, including breaching capital requirements and conflicts of interest breaches. Wyelands Bank entered wind-down in March 2020.
FCA decision notice against Crispin Odey
On 17 March the FCA published a Decision Notice to Crispin Odey (dated 3 March), fining him £1.8m and banning him from working in financial services. He has referred the notice to the Upper Tribunal so it is provisional at this stage. Mr Odey was the founder and majority owner of Odey Asset Management LLP.
The FCA has based its findings on how Mr Odey dealt with his firm’s investigation into the allegations of non-financial misconduct against him, rather than making findings relating to the allegations themselves.
The FCA found that Mr Odey’s actions demonstrated a lack of integrity in (a) deliberately frustrating his firm’s ongoing disciplinary process into his conduct, and (b) showing a reckless disregard for his firm’s governance which caused them to breach certain regulatory requirements. The FCA further held that he did not meet the Fit and Proper test due to his lack of integrity.
The Upper Tribunal will review the FCA’s decision notice in due course.
FCA imposes fine on London Metal Exchange
On 19 March, the FCA published a Final Notice to the London Metal Exchange, fining them £9,245,900 for systems and control failures. The London Metal Exchange is one of the world’s biggest commodities markets. In March 2022 the price of LME’s three-month nickel futures contract became extremely volatile, and the LME was forced to suspend its nickel market for eight days.
The FCA found that its systems and controls were not adequate to ensure orderly trading in conditions of market stress, and led to the extreme volatility and increased the potential exposure of investors and market users to risk.
FCA refusal of registration as a cryptoasset exchange provider
On 17 March, the FCA published a Decision Notice to Zeux Ltd, refusing its application for registration under the MLRs as a cryptoasset exchange provider. Zeux had applied for registration in 2022, but the FCA had significant concerns with its ability to comply with its obligations under the MLRs. In particular, the FCA found failures in the firm’s risk assessments including its business-wide risk assessment and customer risk assessment.
The FCA issued Zeux with a Warning Notice in November 2023, to which Zeux failed to respond and accordingly the FCA issued a final decision notice.
Bank of London
The Bank of London announced in its Annual Report, filed on 13 May 2025, that it is currently subject to enhanced regulatory supervision by the PRA due to various operational and financial issues. It further announced that it is the subject of an investigation in relation to what it refers to as certain historical matters.
Litigation
Motor Finance – FCA submissions
In advance of the Supreme Court hearing on the motor finance cases, heard in early April, the FCA published its submissions to the Supreme Court, dated 10 March 2025. The FCA supported some aspects of the Court of Appeal’s judgment, but raised concerns that the Court of Appeal had departed from the regulatory regime in some of its findings. Among other things, the FCA is asking the Supreme Court to overturn the Court of Appeal’s finding that motor dealers owe a fiduciary duty to customers in their role as credit brokers. We continue to await the judgment of the Supreme Court.
Speech on market abuse
On 29 April, the FCA published a speech by Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, given at the City & Financial Global Market Abuse and Market Manipulation Summit. She made the following points of interest:
- The FCA is focusing on the three Ps: being predictable, proportionate and purposeful.
- 70% of the FCA’s market abuse investigations originate from a Suspicious Transaction & Order Report (STOR), for example the Janus Henderson case, currently in litigation.
- Organised Crime Groups (OCGs) represent the most serious threat to financial markets – accounting for around 25% of all STORs.
- The FCA is making efforts to highlight areas of the greatest risk of harm, including OCGs and inadvertently facilitating insider dealing by actors who mask their identities through overseas brokers.
- The FCA is planning to streamline some of its data collection and reduce the reporting burden on firms.
- On Monday 7 April 76 million transaction reports were received – double the normal number of c.30m – due to the market turmoil caused by the tariffs imposed by the US.
- The FCA recently imposed restrictions on Dinosaur Merchant Bank, preventing it from onboarding any new customers to its CFD business without the permission of the FCA.
- The FCA is concerned about strategic leaks of material information on live M&A transactions being leaked to the press, before the information appears on a regulatory information service. The FCA set out its concerns on this in Primary Market Bulletin 54 where it warned firms that such leaks may constitute unlawful disclosure under MAR.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, May 2025
