Wads of Cash to Burner Phones, Insider Trading Tops FCA Hit List

Insider-Trading Cops Roar as U.K. FCA Probes Reach 10-Year High

(Bloomberg) -- From wads of cash exchanged in curry houses to late night calls on untraceable phones, insider trading never fails to generate headlines. And it looks like U.K. authorities may be gearing up for a few more after opening a record number of cases last year.

The Financial Conduct Authority started 70 insider-dealing investigations in 2016, more than double any other year in the last decade, according to data obtained through a freedom of information request by Bloomberg News. The largest number of cases previously opened in a 12-month period was 29 in 2012.

Wads of Cash to Burner Phones, Insider Trading Tops FCA Hit List

Mark Steward

Source: SFC via Bloomberg

The surge comes after FCA enforcement head Mark Steward took up the helm 18 months ago. Steward joined from the Hong Kong regulator where he pioneered insider-dealing prosecutions in the region. In London, he has cast a wide net, pursuing as many leads as possible regardless of the outcome, according to current and former FCA employees. The watchdog has already opened 23 insider-dealing investigations this year, the data show.

The FCA’s success tackling insider dealing has been a bright spot in an otherwise turbulent period for the four-year-old regulator. The agency published a “mission” statement Tuesday setting out its priorities in a bid to draw a line under past failures -- including a botched press briefing that sent the shares of insurers into a spiral -- and start again under Chief Executive Andrew Bailey, who took up the post in July.

"It comes down to a question of resource," said Neill Blundell, a lawyer at Eversheds Sutherland in London who represents clients facing FCA investigations. "If the agency goes too wide, investigating everything large and small, there is a risk they may lose the deterrence factor if the outcomes become less targeted and resonate with fewer people."

Wads of Cash to Burner Phones, Insider Trading Tops FCA Hit List

Among the regulator’s triumphs combating insider trading have been the convictions of employees from BlackRock Inc., Deutsche Bank AG and Schroders Plc in the last 12 months. The largest U.K. insider-trading investigation, known as Operation Tabernula, resulted in five convictions, including two men found guilty in May after a four-month London trial.

The probe -- which featured clandestine meetings at Indian restaurants -- also resulted in the longest-ever sentence meted out for the crime in the U.K. at 4 1/2 years. The maximum sentence for insider trading is 7 years.

The Tabernula case might not hold the title of the biggest insider-trading case for long. Three bank employees were arrested last year in a case that may become the U.K.’s most wide-ranging investigation related to the crime, people with knowledge of the case told Bloomberg in November. The FCA is working with the National Crime Agency, which assisted with covert surveillance.

Steward declined to be interviewed for this article. The agency changed how it classified cases in March 2013. Previously, a probe into a firm and its employees would count as one investigation. Since 2013, the FCA has counted them separately.

The FCA said at a press conference for its annual business plan Tuesday that more information about the strategic direction of enforcement would be published later this year.


The number of insider-trading cases has fluctuated dramatically over the last decade, falling significantly in 2010 and 2011 when a total of six investigations were opened. The regulator started investigating the manipulation of the London interbank offered rate, or Libor, in 2010, which led to about $9 billion in fines against about a dozen firms from global authorities and could be one explanation for the drop-off.

Of course, not all investigations lead to convictions with between two and 15 cases dropped, referred to another agency or resulting in an acquittal every year, the data show. It’s impossible to correlate the numbers because investigations very often take longer than 12 months, though 2016 and 2017 saw the largest number of probes closed at 14 and 15.

Wads of Cash to Burner Phones, Insider Trading Tops FCA Hit List

--With assistance from Charlotte Ryan

To contact the reporter on this story: Suzi Ring in London at

To contact the editors responsible for this story: Anthony Aarons at, Christopher Elser