Former Tory treasurer firm City Index fined

City Index, the spread-betting firm owned by former Tory party treasurer and City bigwig Michael Spencer, has been fined £490,000 for failing to report some two million trades accurately.

The Financial Services Authority said but for the fact City Index agreed to settle at an early stage the fine would have been £700,000.

Data filed by spread-betting firms is vital to the FSA when it is looking at potential insider trading or market manipulation.

The regulator said that for almost two years up to November 2009 City Index failed to submit to it accurate reports on two million transactions, which accounted for nearly 60% of its business.

Margaret Cole, head of enforcement at the FSA, said: "City Index failed to report accurately a high proportion of its transactions for almost two years.

"This failure is a serious breach of our rules because it can have a damaging impact on our ability to detect and investigate suspected market abuse."

The FSA said City Index's failings had happened despite it sending "repeated reminders to firms of their obligations to provide accurate data".

It said the firm had completely failed to report 55,000 deals and in another 1.97 million failed to fill in one or more data fields.

City Index is owned by the private firm IPGL which is in turn majority owned by Spencer.

Two years ago he had to inject £70 million of his personal wealth into the spread-better after punters defaulted on massive losses.