Insider Trading Possible in Fifth of 2015 U.K. Deals, FCA Says

  • Suspicious trading ahead of takeovers rises to 19 percent
  • Statistics in Financial Conduct Authority annual report

Suspicious trading increased in the U.K. last year, occurring ahead of almost a fifth of all deals, despite several successful prosecutions for the offense.

Suspicious transactions were seen before 19 percent of takeover announcements in 2015, according to the U.K. Financial Conduct Authority’s annual report published Tuesday. That’s up from 14.3 percent the previous year. Since 2009, possible insider trading had halved from a high of about 30 percent, according to analysis by the regulator.

The rise comes after several years of declines, and a series of high-profile victories for the agency. A British judge handed a record 4 1/2-year prison term to a former Deutsche Bank AG corporate broker in May in the FCA’s biggest insider trading probe -- Operation Tabernula. In another case, a former London equities trader at Schroders Plc was sentenced to two years in prison in June after pleading guilty.

Other key figures in the report showed that potentially useful whistle-blower calls fell slightly to 1,014 in 2015-16 from 1,340 in 2014-15. The agency issued 34 penalties totaling 884.6 million pounds ($1.16 billion) against firms and individuals in the 12 months, a monetary decline from the previous year partly because of the large fines levied over the foreign-exchange manipulation scandal in 2014.

New Leadership

The report comes one week into Andrew Bailey’s tenure as chief executive officer at the agency. He replaced Tracey McDermott who served as interim CEO since September after Martin Wheatley was ousted by U.K. Chancellor George Osborne last year. Individual accountability has been top of the FCA’s agenda over the last 12 months with the introduction of the senior managers and certification regime in March. The program places the burden on firms to approve employees as fit and proper to work in the industry.

The FCA has “this year faced some internal challenges and, in particular, significant changes in the leadership of the organization," McDermott said in the report.

McDermott received total pay for the year of 570,000 pounds, including a 75,000 pound bonus, after her salary increased from 300,000 pounds to 430,000 pounds as interim CEO. Wheatley was paid 827,000 pounds for the year under his contract that runs until the end of this month.

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