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- Criminal prosecution will be "real part" in FSA enforcement
- New enforcement powers will be sought
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In a speech to the American Bar Association on 4th October, Margaret Cole, Director of Enforcement at the U.K. Financial Services Authority (FSA) signalled a more aggressive approach by the FSA towards insider trading and pledged to use all the tools at its disposal. The speech follows a recent FSA study that identified suspicious share price movements before nearly a quarter of all takeover announcements in 2005.
Acknowledging a “need to do more” to combat insider trading, Cole said that the FSA’s power to bring a criminal prosecution, although not yet used by the FSA - was an important weapon and should play a “real part” in enforcement. She also noted advantage of the FSA being able to bring prosecutions itself, unlike in the United States, where prosecutions are brought by the Department of Justice, rather than the SEC.
The key targets for insider trading, said Cole, would be insider dealing by City professionals who abuse positions of trust; repeat offenders who systematically trade on inside information; and cases where “there is a significant profit made or loss avoided.”
Other tools that will be increasingly used by the FSA will be search and seizure procedures, and asset freezing injunctions to restrain the proceeds of market abuse.
Responding to criticisms made in the United States that the FSA was a ‘light-touch’ regulator, Cole said that the FSA took insider trading “very seriously” and would in future be bringing more cases, both in the criminal courts and in the FSMA (Financial Services & Markets Act) Tribunal. She also revealed that other enforcement powers not currently available to the FSA, including plea bargaining and immunity agreements, were under “very active consideration.”
To read the full speech, click here: The FSA’s Approach to Insider Dealing.
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