ABN fined £900,000 for price rigging

The London office of ABN Amro, the Netherlands-based investment banking and securities trading group, yesterday suffered one of the Financial Services Authority's biggest fines for helping a US client to rig share prices.

A spokesman for ABN, which has decided not to appeal against the £900,000 fine, said: "We take these issues seriously. We have taken comprehensive action to remedy them, bearing in mind that they relate to events five years ago rather than the ABN Amro of today."

The fine is the FSA's fifth-biggest, and is the largest involving market abuse on the London stock market. The fine would have been £1.25m had ABN not co-operated and taken steps to correct its shortcomings.

ABN's then joint head of the UK equity trading desk, Michael Ackers, has been fined £70,000 for "market misconduct". He has been separately disciplined by ABN Amro and is now the group's UK head of small and mid-cap trading. "This reflects the fact that the FSA accepted that his integrity had not been impugned," the spokesman added. Another, unnamed, individual who was a director of UK equities was suspended for three years by the FSA's predecessor, the Securities and Futures Authority. His suspension ended on 23 December 2001.

The FSA decided that traders in ABN Amro Equities (UK), known as 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".

This happened on three separate occasions between April and October 1998 in respect of shares in Carlton Communications, British Biotech, Volkswagen and Metro.

Carol Sergeant, managing director of the FSA, said: "Trading in stocks simply to move the market price is a serious abuse: it distorts market forces and undermines investors' confidence in the integrity of the prices quoted on exchanges."

The US investor was Oechsle International Advisers, a Boston-based fund manager handling $11.8bn (£7.6bn). Angelo Iannone, the head of ABN's international sales trading desk in New York, had had a long-standing relationship with Oechsle and one of its fund managers, Andrew Parlin. They agreed to increase the price of the shares in question at the end of certain days' trading, to make the prices look better in clients' portfolios.

Ms Sergeant added: "These were not isolated events. The repeated nature of the breaches demonstrates the absence of a robust compliance environment on the firm's trading floor. 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 has found that AAE did not adequately resource its compliance function and failed to have 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 at the time.