The Financial Conduct Authority (FCA) has banned and fined two former Worldspreads (WSL) employees £117,000 for engaging in market abuse.
The regulator fined former chief financial officer Niall O'Kelly £11,900, and former financial controller Lukhvir Thind £105,000 and banned them from performing any function related to a regulated activity.
Between 2007 and 2012, the duo misled investors about the financial state of the spread betting business, which ultimately led to its collapse in 2012, the FCA said.
WSL's holding company Worldspreads Group (WSG) floated on the Alternative Investment Market of the London Stock Exchange in August 2007.
O'Kelly was closely involved in drafting and approving the admission documentation for the flotation, which according to the FCA, contained misleading information and omitted other information investors would have needed to make an informed decision about the company.
Additionally, the FCA said, O'Kelly had helped manage an ‘internal hedging' strategy at WSL, using fake client trading accounts as well as real ones without authorisation. As a result, assests on WSG's balance sheet were artificially inflated.
O'Kelly and Thind were then found to have falsified financial information in the company's annual accounts for 2010 and 2011, including client liabilities and its cash position.
By 31 March 2011, these misstatements amounted to a client money liability of £15.9m - a figure WSL was unable to meet, which ultimately led to its collapse in 2012, the FCA said.
FCA director of enforcement and market oversight Mark Steward said: "Thind and O'Kelly deliberately and repeatedly disseminated false and misleading information relating to a publicly listed company. Their actions amounted to serious market abuse, undermining the integrity of our markets, and this will not be tolerated."
O'Kelly and Thind agreed to settle at an early state of the FCA's investigation, which meant they qualified for a 30% discount. Without the discount, O'Kelly would have been fined £468,756 and Thind £150,000.
Last month the regulator fined Tesco £129m, and ordered it to pay redress in the region of £85m after it found the supermarket had engaged in market abuse.
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