CeMAP FRE2 Principles for Businesses, Consumer Duty & Conduct Rules question: Nadia traded on inside information but doubts

CeMAP FRE2Principles for Businesses, Consumer Duty & Conduct Rules

The FCA suspects that Nadia traded on inside information but doubts it can prove the offence to the criminal standard. What other route does it have?

A None, because insider dealing can be dealt with only by prosecution under the Criminal Justice Act 1993
B It can refer the case to the Financial Ombudsman Service, which can fine individuals for market abuse
C Civil market abuse action under UK MAR and FSMA 2000 s123, since it needs only the civil standard
D It can ask the PRA to prosecute, because the PRA applies a lower standard of proof to market offences

Show the answer and explanation

Answer: C. Civil market abuse action under UK MAR and FSMA 2000 s123, since it needs only the civil standard

UK MAR creates a civil market abuse regime alongside the criminal offence in CJA 1993 s52. Under FSMA 2000 s123 the FCA can impose a penalty of any amount, or issue a public statement, for market abuse, proving its case on the civil standard (balance of probabilities) rather than beyond reasonable doubt. The Financial Ombudsman Service handles complaints against firms and cannot fine anyone, and the PRA is not the market abuse prosecutor.

Common mistake

Forgetting that market abuse has a civil route as well as a criminal one.

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Original practice material mapped to the published CeMAP FRE2 learning outcomes. Independent, not endorsed by Walbrook (formerly LIBF). Verify figures and rules against current guidance before relying on them.