Fine Amount: €452,790
Date: 25 February 2025
Violation Period: March 2017 and June 2023.
Primary Violation: Lack of STOR Reporting
On 25 February 2025, the Central Bank of Ireland announced it had fined Cantor Fitzgerald Ireland Limited (Cantor) €452,790 for failing to meet its obligations under Article 16(2) of the Market Abuse Regulation (MAR). The firm admitted to several instances where it did not properly identify and report suspicious orders or transactions that could have indicated potential market abuse between March 2017 and June 2023.
The imposed fine was reduced from €646,840 to €452,790 as part of a settlement agreement with the Central Bank.
Failure to Report Suspicious Transactions:
Cantor identified potentially suspicious transactions on six occasions between September 2017 and May 2022 but did not submit Suspicious Transaction and Order Reports (STORs) to the Central Bank. In each case, Cantor’s internal assessments identified red flags; however, the firm either concluded there was no need to report or was overly influenced by external factors (e.g., lack of client history or assumptions about client behavior).
Worked Example:
Internal Alert Triggered: A client’s trading activity was flagged by Cantor’s surveillance system due to unusual volume or pattern.
Committee Review: Cantor’s STOR Committee reviewed the transaction, but placed undue emphasis on ancillary factors (such as whether a client had never been flagged before) rather than strictly applying the “reasonable suspicion” threshold.
Result: Despite the flagged concerns, no STOR was submitted to the Central Bank, indicating a breach of Article 16(2) requirements.
Ineffective STOR Committee and Governance Arrangements:
Cantor had a STOR Committee in place, but it was found to be ineffective due to:
Application of unsound rationales and criteria (e.g., focusing on whether the client had invested in other stocks or dismissing potential client-issuer links).
Setting a higher threshold than “reasonable suspicion,” resulting in non-submission of STORs.
Inconsistent approach in assessing suspicious transactions.
Limited role of compliance prior to December 2020, wherein the Head of Compliance had no voting rights on whether to submit a STOR.
Worked Example:
A transaction flagged for potential insider dealing was brought before the STOR Committee. The team decided against submitting a STOR because the client had no prior STOR reviews, even though the suspicious circumstances met the legal threshold of “reasonable suspicion.”
Insufficient Documentation of Analysis:
Cantor did not consistently document why certain flagged transactions did not lead to a STOR submission. Some records were incomplete or omitted key rationale. This practice hindered both internal review consistency and Central Bank oversight.
Worked Example:
Cantor maintained a “Near Miss Log” for transactions initially flagged but later deemed non-reportable. However, key explanations for not submitting STORs were missing in some cases, preventing robust oversight or consistent internal learning.
Failure by Brokers to Escalate Suspicious Comments:
Cantor’s compliance function discovered two instances (August 2019 and May 2020) where brokers did not escalate suspicious client remarks captured on recorded lines. Brokers, as front-line staff, play a critical role in detecting potential market abuse. Their failure to escalate contributed to unreported suspicious activity.
The total fine imposed was €646,840, reduced by 30% to €452,790 following a settlement agreement.
The Central Bank underscored that effective trade surveillance and reporting of suspicious orders/transactions are critical for maintaining market integrity.
Remediation measures were completed by Cantor in June 2023.
“Under Article 16 of the Market Abuse Regulation, firms are required to identify and report to the Central Bank any suspicious transactions or orders (STORs) that may indicate potential market abuse. This legal requirement is a key safeguard in our system to protect securities markets from abuse...”
- Colm Kincaid, Director of Enforcement
“Firms should now review their STOR reporting in light of the Central Bank’s findings in this case, to ensure they are reporting all reasonable suspicions to the Central Bank and meeting their responsibilities to safeguard the integrity of our securities markets.”
- Colm Kincaid, Director of Enforcement
“Market abuse includes insider dealing, unlawful disclosure of inside information and market manipulation. It erodes confidence in the integrity of markets and has the potential to increase the cost of trading...”
- Central Bank of Ireland
Central Bank of Ireland