Salford trader fined £1m for ramping shares
A SALFORD businessman has been fined £1m by the Financial Services Authority (FSA) for ramping the share price of a Manchester-based firm listed on the junior market Plus.
The FSA has also obtained a High Court injunction against Samuel Kahn to prevent future market abuse. It is the first time such an order has been imposed.
According to the FSA, Kahn co-ordinated a scheme to deliberately inflate the share price of Global Brands Licensing between March 24 and April 30, 2010.
The regulator said Kahn orchestrated and controlled the vast majority of the trading in GBL’s shares, disguising his involvement in the scheme by repeatedly impersonating other people when placing orders and co-ordinating trading conducted by third parties.
The trading moved GBL’s share price from 2p on 24 March, 2010 to 5.25p at its height on 20 April, 2010. The FSA said the profits, which totalled £210,563, were withdrawn from a third party’s bank account at Kahn’s instruction and delivered to him in cash.
GBL was launched by Howard Moher to acquire unloved brands and attempt to restore their past glories. It raised £1m when it floated on March 24, 2010, but its shares were suspended on April 30 by Plus after suspicious trading patterns were identified.
Kahn has never worked at an authorised firm regulated by the FSA but he was the subject of an FSA investigation and enforcement action in 2007 for his involvement in overseas boiler-room activities – when worthless shares are sold at inflated prices. In 2008 the FSA made Kahn bankrupt after he admitted liability for claims totalling up to £3.7m made by the FSA on behalf of about 800 investors.
Tracey McDermott, acting director of enforcement and financial crime at the FSA, said: “Kahn undertook a month-long campaign of market abuse, manipulating 85% of the buy trades and 91% of the sell trades of GBL for his own financial benefit as well as to facilitate tax relief fraud and boiler room activities. He impersonated other individuals to conceal his involvement and the scheme was only halted due to the suspension of GBL’s shares on PLUS.
“The FSA views Kahn’s conduct as particularly serious due to his prior misconduct and previous action taken against him by the FSA. In imposing a significant fine under our new penalties regime and obtaining an injunction against Kahn, we want to send a clear message to the market. The FSA will not tolerate this type of repeat behaviour and will use all of our powers to ensure credible deterrence.”
The fine is the first calculated under the FSA’s new penalties regime introduced last year. Kahn has been order to pay back the profits plus a penalty of £884,365, taking the total to £1.09m. It is the second highest fine levied by the FSA after last year’s £2.8m charge to former stockbroker Simon Eagle.
