The regulation of Market Abuse – is it time for an alternative approach?

This chapter explores the regulatory framework governing market abuse, particularly focusing on market manipulation, and advocates that an alternative approach is necessary. The introduction provides an overview of the LIBOR and FX benchmark manipulation scandals, highlighting the context and importance of robust regulatory measures. The chapter examines the existing United Kingdom (UK) and European Union (EU) legal frameworks, detailing the roles of the Financial Conduct Authority (FCA) and the European Commission in civil proceedings related to market abuse. The discussion then shifts to corporate liability for economic crime, scrutinising the appropriateness of the failure to prevent offence. It delves into the concept of corporate legal personality and the corporate veil, tracing the evolution of the failure to prevent doctrine and its impact on corporate culture through the adoption of ‘reasonable procedures’. The paper also evaluates the effectiveness of Deferred Prosecution Agreements (DPAs) in cases of market manipulation and insider dealing, providing illustrative examples. Finally, the chapter assesses the role of financial penalties in deterring market abuse and whether they effectively minimise the potential for re-offending. The conclusion synthesises the findings and offers recommendations for improving the current regulatory approach, contemplating whether a failure to prevent offence market abuse is appropriate and whether it could enhance the prevention and prosecution of market abuse more effectively. This comprehensive analysis aims to contribute to the ongoing debate on the optimal regulation of market abuse, ensuring financial markets operate with greater integrity and transparency.