ABN Amro fined for market manipulation

The financial services authority, the City watchdog, today fined the UK share trading arm of ABN Amro, the Dutch banking giant, ?900,000 for manipulating share prices.

The FSA also fined Michael Ackers, the former joint head of the bank's UK equity trading desk, ?70,000 for market misconduct.

In a statement, the FSA said traders at ABN Amro Equities UK (AAE) "accepted improper instructions whose apparent purpose was to push the closing market price of certain shares to a higher level than would otherwise have been the case".

Trading in stocks simply to move the market price is a serious abuse, the FSA added: "It distorts market forces and undermines investors' confidence in the integrity of the prices quoted on the exchanges."

The fine - one of the biggest imposed by the FSA - is the latest in a raft of sanctions the watchdog has handed out to financial services firms amid accusations that it has been ineffectual.

The FSA has been particularly stung by charges that it was asleep at the wheel during a decade of mortgage endowment mis-selling. Last week, Lincoln, the pensions and insurance company, was fined ?485,000 for the mis-selling of savings plans.

In the case of ABN Amro, the FSA said share price manipulation occurred three times between April and October 1998 and affected four stocks: Carlton Communications, British Biotech, Volkswagen and Metro. The traders were acting on the instruction of a US sales trader at ABN Amro.

Carol Sergeant, FSA managing director, said: "We view with particular seriousness misconduct that occurs in the context of a firm's inadequate investment in compliance procedures, policies and training. Investors need to be confident that they are dealing in clean and orderly markets."

The FSA said ABN Amro failed to devote enough resources to its compliance function and lacked appropriate policies, procedures and training for staff.

"These shortcomings in the compliance function were highlighted to senior management by the compliance officer but no adequate remedial steps were taken," the FSA said.

In setting the fine, the FSA took into account steps taken by ABN Amro since the market misconduct took place to improve compliance procedures and training programmes. Mr Ackers was disciplined and another individual, at the time a director of UK equities, was suspended for three years until December 2001.

ABN Amro said that it had cooperated fully with the FSA and had carried out its own internal investigation after the incidents.

"It's a completely different compliance culture and regime that's in place in 2003," the company said.