The Financial Conduct Authority (FCA) has received more than 5,000 tip-offs alleging suspected insider trading but has opened just a tiny fraction of that number for investigations, a white-collar defence firm has said.
According to a freedom of information (FoI) request filed by international firm Greenberg Traurig, the FCA received 5,107 tip-offs in 2018. However, between 1 April 2018 and 4 March 2019 it opened 61 investigations.
The tip-offs alleged suspected insider dealing and were made under the Suspicious Transaction and Order Report regime (STOR). A similar pattern occurred for the preceding two years, the firm said.
The response also confirms that since 1 April 2014, the FCA has commenced nine prosecutions for insider dealing, resulting in six convictions.
Barry Vitou, chair of Greenberg Traurig’s white collar defence and special investigations and a shareholder in the London office, questioned whether the risk of FCA investigation and enforcement 'represents an effective deterrent’.
’Obligations imposed on firms include the requirement to submit a STOR to the FCA, where there is reasonable suspicion,' he said. 'In such circumstances, firms are required to submit a STOR without delay. It is a matter of concern that the numbers of FCA investigations opened into insider dealing are minute when compared with the number of tip-offs the FCA receives. The low number of FCA investigations relative to insider dealing tip offs is compounded by the FCA’s even lower numbers of prosecutions.’
Vitou added: ‘A level playing field is essential for a fair market place and is the cornerstone of the FCA’s enforcement remit.’
The Gazette understands that some of the STORs could be related to non-UK conduct and would not reviewed unless there is a clear UK angle. Further, multiple STORs about the same person would only result in one investigation, which could skew the figures.
An FCA spokesperson said: ‘The interpretation of our rules is misleading. We review all STORs and other alerts of suspicious trading and investigate where we identify circumstances suggesting that serious misconduct has occurred.’