Under what condition may the FCA refrain from imposing a financial penalty for market abuse?

The correct choice reflects a foundational principle of the Financial Conduct Authority's (FCA) approach to enforcing market conduct regulations. The FCA may choose not to impose a financial penalty for market abuse if the individual genuinely believed, based on reasonable grounds, that their actions did not constitute market abuse. This consideration emphasizes the FCA's recognition that individuals may not always have a clear understanding of what constitutes abusive behavior in the market.

When evaluating cases of market abuse, the FCA considers the intentions and knowledge of the accused party, acknowledging that a lack of malicious intent or misunderstanding can be a significant factor. If a person can demonstrate that their belief in the legality of their actions was founded on rational and reasonable grounds, it may mitigate the need for a financial penalty. This approach serves to promote fairness and ensure that penalties are applied in a manner that reflects the individual circumstances of each case, rather than punishing individuals who may not have knowingly violated regulations.

In contrast, the other options introduce conditions that do not align with the FCA's criteria for refraining from penalties. Unfavorable market conditions do not typically absolve responsibility for market conduct. A previous good record does not automatically cancel out the seriousness of the current offense. Likewise, the classification of an infraction as minor