20 March 2025
On 25 February 2025, the Central Bank of Ireland (‘CBI’) fined Cantor Fitzgerald Ireland Limited (“Cantor”) €452,790 for a breach of the European Union (Market Abuse) Regulations 2016 (“MAR”).
It was found that Cantor failed to report suspicious transactions or orders (“STORs”), had ineffective governance arrangements, failed to document analysis as to why STORs were or were not suspicious, and failed to escalate matters internally for a period of 6 years, from March 2017 until June 2023 when they informed the CBI that matters had been remediated. As Cantor admitted the breach and agreed to a settlement, the CBI reduced the initial fine of €646,840 by 30% to €452,790.
Cantor is authorised and regulated as an investment firm by the CBI. It is subject to the requirements under Article 16 (2) of MAR which requires firms to establish and maintain effective governance around detection and reporting of STORs. The threshold for reporting a breach is whether there is a “reasonable suspicion,” so a relatively low bar. The CBI initially engaged with Cantor as part of its supervisory function where it identified possible deficiencies, leading to an enforcement investigation in 2023. Under that investigation, the CBI found a breach of MAR from the period of March 2017 until the conclusion of the investigation in June 2023, and in particular focused on 4 areas:
The CBI investigation identified 6 sample occasions from September 2017 to May 2022 where Cantor’s internal system detected potentially suspicious transactions but did not submit a STOR to the CBI. This was considered to be reckless as Cantor knew/ought to have known that there could be a breach of Article 16 (2) MAR in not submitting the STORs.
Cantor established a “STOR Committee” in or about 2012 to review and determine whether STORs should be submitted to the CBI. There is no requirement to set up such a committee, and the CBI found in the course of their investigation that there were occasions when the existence of this committee undermined the internal compliance function.
It was found that between March 2017 and June 2023 the STOR Committee used a higher reporting threshold than required i.e. Cantor’s criteria for reporting exceeded the threshold of “reasonable suspicion” as required under MAR. This resulted in a number of STORs not being reported. It was also found that the criteria attached to assessing STORs were unsound, and focused on extraneous information available to them, rather than looking at the factors that could give rise to reasonable suspicion.
Cantor was also found to have taken an inconsistent approach to assessing and reporting STORs which led to confusion. Finally, it was found that while the Head of Compliance attended the STOR Committee, they did not have a vote on whether to provide information to the CBI. This was considered inappropriate as the compliance function act as a second line of defence so should be involved in such decisions.
The CBI found that while Cantor maintained a “Near Miss Log” with transactions flagged for internal review, they did not always keep a record of why a decision was made whether to report or not. They also found that Cantor did not maintain a consistent record of issues determined at STOR Committee meetings, making it difficult to see the reasoning behind decisions taken.
In routine checks carried out by Cantor’s internal compliance function, they identified 2 instances of suspicious comments made by customers to their brokers. These comments had not been escalated by the brokers which highlighted that the internal systems and processes were not as watertight as they should be.
The CBI first engaged in a supervisory manner which progressed to a formal investigation. This investigation was closed when Cantor confirmed in June 2023 that they had remediated the findings, as set out above. As such, the CBI considered the breaches, duration, the perceived recklessness as to the risk under MAR, and their duties to balance proportionality and deterrence, when deciding the appropriate sanction.
As Cantor admitted the breach and agreed to a settlement, the CBI reduced the initial fine of €646,840 by 30% to €452,790 and this was publicly reported by the CBI on 27 February 2025.
Any party preparing to engage with the Central Bank on an investigation or enforcement action where they could be the subject of the exercise of a regulatory power, should approach those engagements with the necessary understanding of the relevant legal issues, including the operation of the principles of natural justice, and the requisite level of preparation and expert professional support.
Although no sanction was imposed against any individual in this case, the CBI can review personal liability under the IAF and SEAR frameworks. For more information on this please see some of our published articles listed below.
Experienced lawyers from KPMG Law LLP’s Financial Services Regulation team can provide firms and individuals with confidential legal advice on these issues. If you have any regulatory or enforcement requirements or expectations, please do not hesitate to contact our team below.
