An analyst at GLG, a high-profile hedge fund business, is among three men arrested by the UK financial regulator on suspicion of insider trading.
The analyst was arrested following dawn raids carried out on Wednesday morning at six addresses across London by the Financial Services Authority and the Metropolitan Police.
Man Group, parent of GLG, confirmed the arrest and said in a statement on Wednesday that it “has been informed by the FSA that the investigation concerns the individual’s actions as a private individual and not as an employee of Man or GLG.” The group, one of the oldest trading houses in London, is not a target of the investigation and is co-operating with the regulator. The employee has been suspended, a Man spokesman said.
The timing for Man, the world’s second-largest hedge fund, could not be worse as it is due to present its results on Thursday.
GLG, which Man bought in 2010, previously clashed with the FSA over the case of Philippe Jabre, one of the fund’s star managers who the FSA fined £750,000 for market abuse in 2006 – then a record fine for an individual. Mr Jabre then set up his own Geneva-based fund and raised nearly $4bn.
The FSA has been slowly building the profile of the insider-trading cases it pursues after initial successful prosecutions against dentists and pensioners. It had not prosecuted a case of insider trading, which carries a maximum sentence of seven years, before 2008.
Wednesday’s arrests are not linked to any other FSA investigation into insider trading.
All three suspects are in their 30s and hold FSA-authorised positions at London financial services companies. The other two are also associated with the asset management industry, people familiar with the investigation said.
The suspects arrested were released on Wednesday night without being charged with wrongdoing. They have been bailed pending further investigation and lawyers for the men could not immediately be reached.
The arrests are the latest examples of the FSA’s efforts to crack down on bad behaviour by professional bankers and traders. The watchdog has secured 21 convictions for insider dealing over the past four years, and last year won its longest ever jail sentence, when James Sanders, who used spread bets to trade ahead of US technology mergers, was jailed for four years.
The watchdog, which will spin out its enforcement arm to the Financial Conduct Authority in April, has recently brought criminal charges against eight additional people. One, Richard Joseph, is on trial for allegedly trading on sensitive information leaked from the JPMorgan Cazenove print room – an allegation he denies.
Seven more have been charged in connection with the FSA’s largest insider dealing probe, an alleged £3m conspiracy after a headline-grabbing investigation codenamed Tabernula. No trial date has been set.