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Insider trading cases soar as tough new rules bite

Insider trading cases soar as tough new rules bite

Reports of insider dealing have hit record highs this year, with reported incidences 24% higher year-to-date compared to the entire previous year.

According to the Financial Conduct Authorities (FCA), the first nine months of the year have seen 3,730 reports of suspected insider dealing. This compares to 3008 in 2016, which itself was a record breaking year that almost doubled the previous year.

The steep rise in 2016 and 2017 reported cases is partly due to expanded reporting requirements were brought in when the Market Abuse Regulation (MAR) was introduced in July 2016, according to legal firm Cleveland & Co.

Banks, brokers and regulated firms now have to report suspected insider dealing and market manipulation to the FCA. These include those that occur in Libor and Forex scandals, even if they do not lead to completed transaction.

Emma Cleveland, managing director of Cleveland & Co, commented: ‘Preventing market abuse is critical to the efficient running of capital markets. Keeping market abuse under check is vital for attracting more capital markets work, like IPOs, to the UK.’

‘However, it is important to note that the compliance costs in dealing with suspicious transactions reports has grown and the increased costs are also being borne by businesses that have an impeccable record in this area.’

Last month, the FCA announced that the number of open cases had also grown to record highs, as the regulator ramped up its investigations even if they do not lead to a punishment outcome.

Despite the growth in reported cases, FCA fines numbers have dropped to five year lows in 2017 in both number and severity of fines.

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