Signs of Insider Trading Found in 33% of UK Takeover Bids
Regulators in the UK are keeping a close eye on takeover bids for signs of insider dealing, and the latest data suggests that suspicious trading activity is more common than previously thought. In 2023, the Financial Conduct Authority found signs of possible insider dealing in about 30.3% of takeover bids, a slight decrease from the year before.
The FCA has adjusted its methodology to now include suspicious share-buying activity on the day bid announcements are made, leading to a higher rate of suspect cases. This change has shed light on the fact that insider dealing may have been more widespread for years due to flaws in the previous identification process.
The FCA also examines abnormal trading volumes and other anomalies before bids to detect potential abuse. These indicators have shown a decrease in suspicious activity, indicating a positive trend in detecting and addressing insider dealing.
Insider dealing is a serious offense, as highlighted by a recent case where a former Goldman Sachs analyst was sentenced to 22 months in prison for insider dealing and fraud. The FCA takes prosecuting these cases seriously, with significant penalties in place for offenders.
The FCA’s enhanced methodology aims to set high standards of transparency, reduce the risk of market manipulation, and promote fair competition. While suspicious activity reached a 13-year high last year, the regulator’s efforts to improve detection and reporting mechanisms are showing positive results.
Overall, the FCA’s focus on detecting and prosecuting insider dealing is crucial for maintaining the integrity of the financial markets, protecting investors, and ensuring a level playing field for all participants.
