It’s probably safe to say that billionaire Michael Spencer is not one happy billionaire right about now. His spread betting firm City Index has just been fined by the UK Financial Services Authority or some discrepancies in the firm’s financial transactions.
More specifically, the FSA has fined £490,000 for failing to report thousands of trades and an estimated 2 million others over the course of a two year period.
It wouldn’t be that big of a deal except for one tiny little detail. That is, FSA regulations require all firms to submit accurate data for their transactions by the end of the business day and after each every trade has been executed. These regulations are in place so that the FSA can monitor and ensure sound business practices and prevent insider trading and market manipulation. It would appear someone at City Index didn’t get the memo.
Of course, anytime a company has nearly 60% of its reportable transactions go unreported, some red flags are going to be raised by the FSA watchdog.
Oh, but don’t worry, it’s not like anything shady is going on over at City Index, the problem was a new IT system, and not them trying to cover anything up. I knew it from the first time the story broke. I thought right away, this is definitely an IT issue…But I also thought that Tiger Woods was innocent and that Lebron James would never leave Cleveland.
City Index was one of the UK’s first Spread Betting providers when we opened for business over 25 years ago. But it’s been a bumpy road leading up to this disciplinary action taken by the FSA.
But isn’t a fine a little harsh? Overlooking over 2 million in transactions is an honest mistake isn’t it? Aside from the fact that in the two years to March 2009 the business ran up losses of £91m, and that Spencer had to inject £70m of his own money to keep the firm afloat, there’s nothing to see here, this is a clear cut IT issue. No?