Insider Dealing Arrests

Stocks and Shares - Eight Arrested for Alleged Insider Dealing

Eight people have been arrested in the biggest ever crackdown by the FSA for alleged insider dealing, as properties were searched in London and South East England by City of London police and 40 FSA officials. Most of the arrests took place at homes, which implies the use of the infamous ‘dawn raid’ (where were the TV cameras?).

Computers and documents were taken away as part of the investigation that has apparently been underway for months. All the people arrested are men aged 27-48.

The Financial Services Authority said the arrests were part of its "ongoing work to combat market abuse". The FSA is taking steps to improve and increase its insider dealing enforcement activities and there are already three cases before the courts. It appears determined to get rid of its reputation of being ‘toothless’.

Plea bargaining similar to that used in the USA will form part of a "bold and more resolute" approach.

Sir Callum McCarthy, ex Chairman, said the City still didn’t take the problem of market abuse seriously enough.

The FSA is at long last improving its enforcement and monitoring activities of financial markets via an upgrade to Sabre - its transaction monitoring system.

It also is determined to put greater emphasis on prosecutions designed to act as a greater deterrent, with those found guilty facing the very real prospect of jail time.

The FSA has already investigated a number of cases of market abuse including the spreading of false rumours, as mentioned by Henry Paulson, with regard to the funding position of HBOS, which caused its share price to slump back in March.

These latest arrests come just days after the FSA charged Malcolm Calvert with twelve counts of insider trading between 2003 and 2005. Mr Calvert used to be a partner at the Queen's stockbroker Cazenove. If he is found guilty, he faces up to seven years in prison.

Yesterday the FSA also charged Matthew Uberoi and Neel Uberoi with 17 counts of insider dealing. The pair, who are related, are accused of “exploiting inside information” when trading thousands of shares in - NeuTec Pharma and Gulf Keystone Petroleum in 2006.

Another criminal case being brought by the FSA is against Christopher McQuoid, ex general counsel of TTP Communications, and James William Melbourne. They all deny any wrongdoing.
According to lawyers, if the FSA manages to get a major scalp this would be a huge deterrent to other would-be insider dealers.

Let us hope that any wrongdoers are "brought to justice" as the phrase goes. Personally I am rather surprised it hasn’t been given more prominence on the financial channels.