Quality | 2009.12.18
Tory party treasurer's firm fined $25m
Icap, the broking firm founded by Michael Spencer, faces a payout in the US for \'deceptive practices\'
David Cameron faced fresh embarrassment tonight over his links to high finance when a multi-billion pound broking firm co-founded by the Tory party treasurer was fined $25m (£15.5m) in the US for "deceptive practices".
In addition to the fine against the US subsidiary of Icap, the broking firm founded by Michael Spencer, five of its brokers were charged with aiding and abetting the "fraudulent conduct". Two executives were charged with failing to supervise the brokers.
In a statement tonight the US securities and exchange commission said that brokers from Icap Securities USA had "displayed fictitious flash trades" and "disseminated false trade information" to attract customers. It said: "Icap\'s customers believed the displayed fake trades to be real and relied on the phony information to make trading decisions."
Lorin L Reisner, deputy director of the SEC\'s division of enforcement, said: "It is essential that Icap and other inter-dealer brokers refrain from engaging in conduct that discredits their privileged position in the marketplace. Icap engaged in deceptive practices that violated the legal and professional standards required of market participants; our action today demonstrates zero tolerance for such conduct."
The fine was seized on by Labour, which has been running a campaign against Lord Ashcroft, the Tory deputy chairman who declines to clarify his tax status, and Zac Goldsmith, the party\'s candidate in Richmond Park, who until recently benefited from "non-dom" tax status.
Emily Thornberry, Labour MP for Islington South and Finsbury, said: "David Cameron has already been embarrassed by the deputy chairman of his party\'s refusal to confirm if he pays tax in this country. Now a US subsidiary of a company founded by his party treasurer is fined millions for their activities. People will make their own judgments about what it says about David Cameron that he puts these people in such senior positions."
In its statement, the SEC said that Icap\'s brokers on its US treasuries (UST) desks had displayed thousands of "fictitious flash trades" to its customers between December 2004 and December 2005. The brokers also claimed to customers that its electronic trading system would follow "work-up protocols" in handling customer orders. The brokers bypassed these protocols by using manual tickets.
Icap said tonight that it had agreed to a settlement with the SEC, which included "the concept of non-intentional fraud", and that it had done so "without admitting or denying allegations of any wrongdoing". It added: "Icap remains committed to maintaining the highest professional standards and to providing its customers with the highest quality service."
Spencer, who is chief executive of Icap and has an estimated £250m fortune, told the Sunday Telegraph that he might move the firm from Britain if Labour wins the election. "If the Conservatives are not elected and if Labour continue to increase taxes, as they probably will, then, regrettably, we would presumably have to reconsider moving domicile."
For more information, please visit
http://www.guardian.co.uk/politics/2009/dec/18/tory-treasurer-firm-fined
