Financial regulator warns City firms of the danger posed by organised criminal groups that seek to manipulate markets. It has revealed it made three arrests as part of a “major” operation.
The Financial Conduct Authority announced that it worked with the National Crime Agency on 1 February to arrest three men on suspicion of insider trading, conspiracy to commit insider dealing and money laundering related to organised crime.
The operation involved more than 38 FCA and NCA investigators. It covered three residential addresses, and digital devices were seized.
The FCA interviewed the three men under caution. The FCA released two of the men under investigation, and released the third on unconditional bail. The FCA reported that a fourth man was interviewed Tuesday under caution and remains under investigation.
The regulator also separately warned financial firms about techniques used by organised criminals trading equity spread-bets and contracts-for-difference, which are derivatives that enable people to make bets on the direction of prices in stock markets.
The FCA stated in a note about market conduct that “suspicious trades by members of [organised criminal groups] on products whose underlying securities include UK and international listed equity, form a significant part of the overall volume suspicious trading we observe on equity markets”.
The report said that criminals were involved in “a pattern” of trading prior to merger and acquisition announcements and press speculations about M&A.
The FCA stated that gangs would likely target junior staff members in the deal advisory business for recruitment, as sources of information. The FCA said that firms may wish to warn staff “whose names do not appear regularly in regulatory announcements” of the dangers of mentioning having inside information on their social media profiles.