The number of suspicious transactions reported to the Financial Conduct Authority has increased by 28 per cent since it took over as City regulator, according to law firm Pinsent Masons.
Data obtained from the FCA by the law firm showed that the number of suspicious transaction reports – often associated with suspected insider dealing – rose from 1,099 in 2012/13 to 1,409 in 2013/14.
The figures also revealed that there has been a 316 per cent rise in suspicious transactions over the past five years, up from 338 in 2008/9 to 1409 in 2013/14.
On average 117 suspicious transactions are now reported each month, compared to 28 a month five years ago.
Reports of ‘misuse of information’, the most frequently reported abuse, up 29 per cent under FCA supervision, from 980 reports in 2012/13 to 1267 reports in 2013/14, while ‘distortion and manipulation’ reports saw a 24 per cent increase in the same time period.
A suspicious transaction is one in which there are reasonable grounds to suspect it might constitute market abuse, such as insider dealing or market manipulation.
Since 2005 it has been a requirement of the Market Abuse Directive that firms seeing suspicious transactions must report these to the regulator.
Michael Ruck, a senior financial services enforcement lawyer at Pinsent Masons and formerly with the FCA, stated that the regulator has “upped its game” regarding its insider dealing and market abuse enforcement action.
He said: “The fear factor from this action and the current high profile markets investigations may be one reason to explain the rapid rise in suspicious transaction reports over the last few years.”
“It may be suggested that as the markets have recovered over the past few years that there has been an increase in misconduct leading to the rise in reporting, however, firms and individuals are now far more cautious and making a suspicious transaction report affords them some peace of mind that the regulator won’t be knocking down their door early one morning following a tip-off from another source.
“The fear of non-compliance and even higher penalties now outweighs the fear of a regulator asking questions and potential enforcement action.”
