Stockbroker is fined £700,000 for rigging share prices in City scam

Barney Alexander manipulated the prices of shares on the London Stock Exchange by entering multiple small orders to buy and sell shares while working as a self-employed trader from his home in Glasgow.

Last May, police carried out a dawn raid at his home in Turnberry Road in the Hyndland area after his activities came to light.

Yesterday, Alexander was also ordered to pay about 323,000 to firms that suffered losses as a result of his actions.

Spread-betting company City Index Ltd received the most compensation, at just over 300,000.

A further 306,312 held in trading accounts controlled by Alexander has been transferred to those firms.

Alexander has also been banned from performing regulated functions for a minimum of five years.

Tracey McDermott, the FSA's acting director of enforcement and financial crime, said: "The FSA views market manipulation extremely seriously.

"Alexander's behaviour was deliberate and repeated over a significant period of time.

"He sought to conceal his trading and made substantial profits at the expense of the firms which allowed him to trade with them.

"The court action shows the FSA's determination to use all our powers to prevent market abuse and to pursue those who commit it."

Alexander said that he did not realise what he was doing was market abuse and that his case highlighted a need for greater clarity around the rules.

"At no point did I realise that my actions might amount to market abuse," he said.

"I developed a strategy that exploited weakness in the systems of large firms and I thought I was exploiting a trading inefficiency.

"My strategy did not mislead the rest of the market and I have paid back all the spread-betting firms involved.

"I think this case demonstrates that there is a need for greater clarity and guidance to assist self-employed traders like me to work out what is and what is not permitted by law.

"I still don't quite understand what it is that I've done that would prompt the FSA to say that my trading was abusive.

"You need clarification on these areas. The last thing that you want is a knock on your door with six policemen coming in and carrying out a dawn raid and freezing your bank accounts."

Between 1 January, 2009, and 25 May, 2010, Alexander, 47, an experienced trader, generated 629,130 by trading contracts for differences (CFDs) and spread bets at prices he created through his share price manipulation. He frequently used CFD and spread-betting accounts in the names of third parties to disguise his behaviour.This manipulation of the price of shares and derivatives at the expense of the firms amounted to market abuse.

Because Alexander settled at an early stage of the FSA's investigation and consented to the court order, he qualified for a 30 per cent discount on his financial penalty.

Otherwise the FSA would have asked the court for a 1 million fine.

A spokesman for City Index, said: "It is unfortunate that in this instance a trader has made the decision to abuse a system which the majority of our clients use appropriately and within the law.

"We believe the successful prosecution of an individual involved in market manipulation is a positive result for our industry."