Three people have been arrested following a joint operation between top cops and the City watchdog following an investigation into a “criminal insider dealing ring”.
Over 100 staff from the City watchdog and National Crime Agency (NCA) took part in raids on five residential premises across London and Manchester on Tuesday.
Authorities seized more than 30 phones, computers and tablets while suspects, who were left unnamed, were taken into police stations for interviews.
Steve Smart, executive director of enforcement and market oversight at the FCA, said:
“Insider dealing is a serious threat to the integrity of our markets. Working with partners, we will continue to use all the powers at our disposal to crack down on serious and organised crime groups engaged in market abuse.”
The regulator’s chief Nikhil Rathi was speaking to MPs on Tuesday morning and said a “very major operation” was underway “against some very serious suspected criminal activity”.
“We are taking increasingly assertive action, including with the Takeover Panel, with the sell-side institutions but also the army of advisers and others who get involved in these situations and potentially may be privy to information which could be made available inappropriately,” Rathi told policymakers.
The Takeover Panel acts as the regulator for deal activity in the UK. The “sell-side” refers to investment bankers and brokers.
“Sometimes there may be leaks because a participant in a corporate finance transaction considers there may be some tactical advantage around leaking in terms of securing a better price or securing some commercial advantage,” the FCA boss said, adding this may not constitute insider trading.
Organised criminal groups
In July, the regulator said it had identified abnormal movement in company shares in a record 41 per cent of takeovers before the deal was announced.
Rathi said the regulator was “concerned” by the figure and while some may have been driven by media speculation “some of it may be leaking of inside information”.
“Sometimes we are dealing with organised criminal groups who are highly, highly sophisticated and highly professional and for whom this is a very profitable business model in our market but [also] many, many markets around the world,” he said.
Last year, the watchdog secured four insider dealing convictions with two resulting in record sentences totalling 11 years of imprisonment. Some 12 people were fined a total of £1.7m for insider trading, market manipulation and making misleading statements.