On August 1, 2019, the UK Financial Conduct Authority (FCA) published a new issue of its newsletter on market conduct and transaction reporting issues (Market Watch 60).
In Market Watch 60, as well as some commentary on money laundering risks in capital markets, the FCA focuses on its concerns and findings about control of access to inside information (being information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more UK- or EU-listed issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivatives).
The FCA’s commentary in Market Watch 60 follows the conviction of a former compliance officer in the London branch of a major investment bank, who had been found guilty of five counts of insider dealing as well as of unlawful disclosure of inside information.
The FCA commented that it has recently highlighted the importance of firms being able to identify conduct risks to ensure they have effective market abuse controls in place, and that when investigating suspected insider dealing, it is crucial to establish who had access to inside information at particular points in time — and the legal requirement for firms in possession of inside information to maintain ‘insider lists.’
The FCA states that it views a firm’s inability to respond to a regulatory request with accurate records of who had access to inside information as an indication of underlying weaknesses in systems, procedures and policies. Firms that cannot respond appropriately to FCA requests may be subject to further regulatory scrutiny.
The Market Watch 60 is available here.