A total of seven people have been arrested in the FSA probe
A hedge fund trader arrested this week as part of a probe into insider dealing has pledged to clear his name.
Lawyers for Julian Rifat, a trader at Moore Capital, say he is "deeply distressed" by accusations made against him.
Mr Rifat was arrested in a joint operation by the Financial Services Authority (FSA) and the Serious Organised Crime Agency (Soca).
He and six others also arrested have not been charged with any offence.
"Mr Rifat denies the allegations that have been made against him," Mr Rifat's lawyers Kingsley Napley said in a statement.
"[He] is deeply distressed by the accusation and is working to clear his name as soon as possible."
Stephen Pollard, partner at Kingsley Napley, is acting for Mr Rifat.
He is well known in the City for his role defending Barings Bank insider trader Nick Leeson in 1995.
Mr Rifat's employer, Moore Capital, has confirmed that an employee has been put on gardening leave, and that they are cooperating fully with investigators.
Moore Capital is a well-known firm within the City, with its founder Lewis Bacon worth around $1.5bn (£1bn), according to Forbes magazine.
The FSA has refused to name the seven people arrested on Tuesday and Wednesday - saying only that among them are two senior City professionals at leading city institutions and one City professional at a hedge fund.
The two senior City professionals are believed to be Martyn Dodgson, a managing director in Deutsche Bank's corporate broking group, and Clive Roberts, the head of European sales trading at brokerage Exane - partly owned by BNP Paribas.
Mr Dodgson joined Deutsche Bank from Lehman Brothers in October 2008, following the Lehman's collapse. He has also worked for Morgan Stanley and UBS, and was part of a team advising the Treasury on its stakes in the part-nationalised banks.
Clive Roberts previously worked for ABN Amro, the Dutch bank acquired by Royal Bank of Scotland before the credit crisis began.
No charges have yet been brought against any of those arrested, however, and all are expected to be released on bail following questioning.
Based on previous insider dealing cases, the inquiry is likely to take many months.
The joint investigation by the FSA and Soca - billed as the FSA's "largest ever operation against insider dealing" - involved raids on 16 addresses in London, Oxfordshire and the south-east of England.