Arrests after police and City watchdog smash ‘criminal insider dealing ring’

Three individuals have been apprehended as part of a joint operation between law enforcement and the City watchdog, following an investigation into a "criminal insider dealing ring". Over 100 officials from the City watchdog and the National Crime Agency (NCA) conducted raids on five residential locations in London and Manchester on Tuesday.

Authorities seized over 30 electronic devices, including phones, computers, and tablets, while the suspects were subsequently taken into police stations for questioning. Steve Smart, executive director of enforcement and market oversight at the FCA, emphasized that insider dealing poses a significant threat to market integrity. "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," he stated.

The regulator's chief, Nikhil Rathi, discussed the operation during a briefing with MPs. He highlighted the significance of the bust, describing it as "very major" and part of a broader effort to combat intricate criminal activities. "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 is the regulator for deal activity in the UK, while "sell-side" refers to investment bankers and brokers. Leakages in such transactions can occur due to participants seeking a tactical advantage, though this may not constitute insider trading. In July, the regulator revealed that it had identified abnormal share movements in a record 41 percent of takeovers before the announcement.

The regulator expressed concern over this figure, acknowledging that some movements might be driven by media speculation or insider leaks. "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," Rathi noted.

Last year, the watchdog secured four insider dealing convictions, with two resulting in 11-year prison sentences. Additionally, 12 individuals were fined a combined total of £1.7 million for insider trading, market manipulation, and making misleading statements.