FSA to clamp down on listing breaches

With its proposed powers, the new City watchdog would be able to fine companies that do not fulfil their obligations as a publicly listed company. The severity of the fine will depend on the seriousness of the breach, and whether profits were accrued due to the infringement.

In May last year the FSA’s powers were extended to include the authority to manage the listings of all companies trading in the UK. This task was previously the responsibility of the London Stock Exchange. However, the LSE did not have the power to impose financial penalties on companies that broke listing rules.

An announcement of the exact date for the introduction of the Financial Services and Markets Act is expected in the next few weeks.

FSA director of listings Paul Geradine was reported in the Guardian as saying: ‘Financial penalties will be an important addition available to the UK listing authority.’ He added the fines would be an important way of emphasising the FSA’s serious view of listing rule breaches.

However, the proposal is unlikely to be well received by the City which has attacked the government in the past for tightening the regulatory regime, accusing it of introducing a system of fines for petty misdemeanours.

The Financial Services and Markets Act received Royal Assent in June 2000 and when it is implemented will establish the FSA as the single statutory body for financial business in the UK. New FSA duties will include taking over the responsibility for banking supervision from the Bank of England and the Treasury.

The watchdog will then regulate all financial businesses, unit trusts, investment exchanges and clearing houses

The FSA is also putting forward plans to lift the requirement for some companies to trade for three years before they seek a UK listing, and in a separate proposal they are hoping to revamp the listing rules covering warrants and retail investors.


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