FSA begins insider dealing probe

An FSA study found 29% of takeovers showed signs of insider trading

The Financial Services Authority (FSA) has begun an investigation in an effort to clampdown on insider trading.

The UK financial watchdog said it was "looking at a small number of deals where there was a leak of information".

It added it was talking to all key parties involved, including lawyers, advisors and PR firms.

Earlier this year, the FSA said almost a third of large takeover deals showed signs of possible insider trading and the situation was getting worse.

'High level review'

"We note that merger and acquisition deals are often complex and involve a large number of 'insiders'," the FSA said in its latest Market Watch newsletter.

"In this review, we will meet specific 'deal teams' to go through the chronology of deals, undertaking a high-level study of IT systems and security and reviewing hard-copy filing systems, together with a sample review of documents."

The regulator added that the latest inquiry, which is being carried out in consultation with the Takeovers and Mergers Panel, aimed to produce examples of good practice of procedures and controls.

According to reports in several newspapers, the FSA is closely inspecting four deals for evidence of insider trading.

The companies involved in the deals have not been named, but according to newspapers, the Takeover Panel ordered three of the four to announce they were in deal talks, after sharp rises in their share prices while supposedly "secret" talks were in progress.