'No-One's Laughing Anymore...More Bankers Will Be Going To Jail'

Chain Gang

UK securities regulator The Financial Services Authority (FSA) has long been regarded as a big cat without claws. While regulators in the US and other jurisdictions have been busy bringing naughty bankers and their like to justice, the FSA has had a poor record when it comes to helping to bang up white collar criminals.

And the regulator appeared to be particularly lax where insider trading was concerned. Indeed, many City traders regarded its monitoring systems as amateur, and its ability to unravel complicated schemes as non-existent.

So, when FSA CEO Hector Sants recently said that the agency was to crack down on insider trading, and suggested that a few bankers would be thrown in the slammer before too long, there were sniggers all round. 

But there have been a couple of signs recently that the FSA has finally got its insider trading act together, with successful convictions of former employees at both Hoare Govett and Cazenove. And on Tuesday it was revealed that the regulator has been involved in what has been described as one of the biggest insider trading cases involving London ever.

Some 143 FSA staff and members of the UK's Serious Organised Crime Agency raided homes and businesses in 16 locations Tuesday, including hedge fund Moore Capital, Deutsche Bank and Exane. 3 City professionals at the aforementioned firms are said to have been arrested and detained for questioning, as police took away documents and computers.

The FSA said in a statement:

'In the first operation carried out jointly between the Financial Services Authority (FSA) and the Serious Organised Crime Agency (SOCA), 16 addresses have been searched this morning in London, the South East and Oxfordshire in the FSA's largest ever operation against insider dealing.

Documents and computers have been seized from residential and business premises.

Six men including two senior city professionals at leading city institutions and one city professional at a hedge fund have been arrested on suspicion of being involved in a sophisticated and long-running insider dealing ring.

It is believed that the city professionals passed inside information to traders (either directly or via middlemen) who traded based on this information and have made significant profits as a result.

The operation was carried out by 143 FSA personnel together with officers from SOCA as part of a joint investigation that commenced in late 2007.

No further details can be confirmed at this time'.

One banker told Here Is The City: 'The FSA has finally come out from under its rock, and signalled a clear intent. Many have complained that insider trading has been rife in the City for years, and that the authorities were seemingly powerless to do anything about it. That's all changed now. The FSA has stepped up its game. No-one is laughing anymore. Believe me, more bankers will be going to jail'.

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