A British appeal court has dismissed a bid by former Canadian day trading firm, Swift Trade Inc., to overturn a lower court decision that upheld the regulator’s conclusion that the firm engaged in abusive trading.

The Court of Appeal (Civil Division) handed down a decision today dismissing an appeal from the company formerly known as Swift Trade and its CEO, Peter Beck.

Back in 2011, the UK Financial Services Authority (FSA) ruled that the firm had engaged in market abuse by engaging in a form of manipulative trading known as layering. It ordered an £8 million penalty against the firm. (See Investment Executive, UK regulator fines Swift Trade $12.75 million for market abuse, August 31, 2011.)

Swift Trade appealed the FSA’s decision to the Upper Tribunal, but that appeal was dismissed. It went on to appeal that decision on two grounds — first, that the company was dissolved and so did not exist when the FSA sanctioned it; and, second that the trading in question didn’t violate the law because it took place in contracts for difference (CFDs) not traditional securities.

The court dismissed both grounds for appeal. It was unanimous in finding that CFDs are covered by the laws against abusive trading. And, in a two-to-one split decision, it found that the FSA was able to proceed against a company that had since been dissolved.

“It is one of the curiosities of this argument that this apparently non-existent company by the trustee of its remaining assets, BRMS Holdings Inc., referred the decision notice to the Upper Tribunal and instructed solicitors and counsel to contest the decision notice in the Upper Tribunal. Even more curiously, this apparently non-existent company has, in the same way, sought and obtained permission to appeal and continued to instruct solicitors and counsel in this court,” the court noted in its decision.

It went on to uphold the Upper Tribunal’s ruling that Canadian legislation “preserves the otherwise dissolved company”.

The FSA’s successor, the Financial Conduct Authority (FCA), said today that the ruling involving the type of securities involved “is an important decision” which confirms that its interpretation of the law was correct, and that illegal trading in CFDs constitutes market abuse.

Editor’s note: In August 2011, £8 million was approximately $12.75 million. Using December 19, 2013 exchange rates, £8 million is approximately $13.96 million.