FCA says abnormal trading preceded 13.9 percent of mergers and acquisitions in 2014
Suspicious trading in shares ahead of M&A announcements dropped to an all-time low in the UK last year, indicating a decrease in insider trading, according to regulator the Financial Conduct Authority (FCA).
Abnormal price movements preceded 13.9 percent of M&A announcements last year, compared with 15.1 percent in 2013, the FCA says in its annual report. The measure peaked at more than 35 percent in 2010 and was above 30 percent when measurement began in 2006.
‘The statistic does not provide a perfect measure of the level of insider trading, but the observed significant decline in the incidence of potential insider trading cases suggests insider trading has become rarer,’ the regulator adds.
The FCA says media speculation, analysts’ assessments and other factors can also influence trading ahead of M&A announcements, which is why the study does not provide a ‘perfect measure’ of insider trading levels.
The authority also says in its annual report that the number of whistleblower cases it has processed rose 28 percent to 1,340 in the year ending March 2015 compared with the previous year. The number has more than tripled in the past five years, which ‒ according to the FCA ‒ is a sign of increased awareness and a rising emphasis on whistleblower cases.
‘Information from whistleblowers has contributed to firms and individuals being fined, permissions being varied or withdrawn, warning letters being issued and a range of other early intervention actions, such as asking a firm for clarification about its activities,’ the report notes.
The financial advisory sector accounted for the largest number of whistleblowing cases, at 271, followed by consumer credit with 208, retail banking with 156 and retail insurance with 155. Investment banking accounted for 93 cases and the asset management sector had 35.
