On 29 October 2007, the FSA published its latest Market Watch newsletter. The newsletter, which covers market conduct and transaction reporting issues, contains a useful section on insider trading reviews undertaken by the FSA. The FSA explains that when it undertakes preliminary enquiries into suspected cases of market abuse (particularly insider trading) it has to find a link between those who may have traded based on inside information and an 'insider' who may have passed that information to those who may have traded. In order to do this the FSA needs to find out who had inside information, what the inside information was and when it was known.
Drawing on good practice from information received by it in relation to past enquiries into suspected cases of market abuse, the FSA has provided some general pointers on timetables and insider lists, including the following:
- Timetables: The FSA expects timetables to be given in good time (typically within two weeks) and to be comprehensive, containing descriptions of meetings and other contacts specifying the information that was passed or discussed between those present.
- Insider lists: The FSA expects insider lists to be comprehensive and to extend to senior management with managerial oversight as well as support staff. The FSA also suggests that firms should consider how widely accessible partial information about a transaction or event might be (e.g. by inclusion on a Grey List) because partial information may give someone sufficient inside knowledge to trade or pass on to a third party. Firms should also consider what audit trails they have for reviewing access to such partial information.
Market Watch Issue No. 24 can be found here.