Inquiry into illegal trading around Brexit referendum

THE City watchdog is investigating three bankers at the same firm for engaging in illegal trading in the weeks before and after the 2016 Brexit referendum.

The Financial Conduct Authority (FCA) issued a warning notice against the three unnamed traders, accusing them of engaging in a form of so-called spoofing by placing orders they didn’t intend to execute in the summer of 2016.

“Spoofing” usually involves traders flooding the market with orders and then cancelling them just before execution, to fool rivals over the direction in which the market is heading.

The three traders placed false large orders for futures contracts only to make smaller orders on the other side of the trade, according to the watchdog.

They continued the misleading trading both individually and in conjunction with each other, it added.

The FCA said the trading activity took place in June and July 2016, around the time of the Brexit vote, which occurred on June 23.

Financial markets experienced high levels of volatility after the UK unexpectedly voted to leave the EU, including assets such as the pound, which fell sharply.

The FCA did not name the traders or the bank they worked for at the time.

The warning notice means that the FCA has conducted an internal investigation but its decision-making panel has yet to make a formal ruling on the matter.

The FCA declined to provide any further information on the case.

In July, a London employment tribunal ruled that JP Morgan had wrongly fired a banker over allegations of spoofing in a misguided effort to appease the City watchdog.

The judge found that the Wall Street behemoth only sacked Bradley Jones because it wanted to be seen to take a tough line on spoofing after it dished out almost $1bn (£720m) to settle wider investigations into alleged market manipulation.

The most recent case of spoofing investigated by the FCA came in December, when it fined a City trader £100,000.