Financial firms have been warned to watch out for junior members of staff being recruited or compromised by organised crime gangs wanting to make money from insider trading.
The Financial Conduct Authority (FCA) issued the advice after three men were arrested on suspicion of insider dealing and money laundering “linked to organised crime”.
The regulator revealed that the trio, which included two men aged 52 and another aged 53, had been detained following raids at three residential properties in London on 1 February. They have since been released on bail.
A fourth suspect, a 48-year-old man, was also interviewed under caution on 13 February and remains under investigation.
The FCA carried out the operation in partnership with the UK’s National Crime Agency.
It came as the regulator issued new guidance this week that warns firms to be “alert to the possibility of being used to facilitate insider dealing by members of OCGs [organised crime groups]”.
The regulator said there was risk that workers were being approached by criminals, and added: “It’s likely that OCGs’ recruitment of information sources is targeted at junior members of staff.”
It advised companies to look out for suspicious patterns of trading before merger and acquisition announcements and press reports – and to also watch out for multiple clients “trading in the same security for the first time”.
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The FCA warned that feeding “true and false stories” to the press could be another indicator of criminal involvement in financial markets – and that all trades placed before media reports appeared should be regarded as “potentially suspicious”.
The regulator said staff who work in merger and acquisition roles should avoid references to having access to insider information on their social media profiles.
It said firms should avoid naming such staff on their social media channels as well.
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Speaking on Wednesday following the announcement about the arrests, Steve Smart, joint executive director at the FCA, said insider dealing posed a “significant threat to the integrity of financial markets both in the UK and overseas”.
He added: “The FCA is committed to combatting organised criminal networks involved in this threat.
“We work tirelessly, using our own sophisticated monitoring systems and specialist teams, to identify and disrupt people involved at each stage of these trading events from the insider leaking information, people who sell inside information to traders and brokers who facilitate access to the trading market.
“Working with our domestic and international enforcement partners we will continue to use all the powers and tactics available to us to disrupt this threat.”
