ALEX BRUMMER: FCA ripples its muscles over insider trading

Insider trading is one of the City’s oldest crimes. Barely a takeover happens without a run-up in the target company share price beforehand.

Advisers seek to prevent leaks by the use of code names and meetings in secret locations but it is impossible to plug all the gaps. 

In recent times, the ritual of ‘capital markets days’ has developed and key information is shared with big battalion investors and analysts.

Fraud trial: The FCA is launching a criminal action against former Janus Henderson analyst Redinel Korfuzi who has been charged with profiting from trades in five companies 

This potentially gives financial professionals a head-start on private investors. Technology means that with the exception of deliberate deception, such as using burner phones, financial insiders are only too aware of how compliance officers and regulators are able to access communications traffic.

The delete button can be hit but the trace is still there on the hard drive or in the cloud. 

It is comparatively rare that staff at a major financial firm find themselves before the beak on hard-to-prove insider charges.

The Financial Conduct Authority (FCA) is often given a hard time about the sclerotic approach to justice. The failure to produce a timely report on the implosion of Neil Woodford’s fund management empire comes to mind.

So it is fascinating to see the FCA launching a criminal action against former Janus Henderson analyst Redinel Korfuzi, who has been charged with profiting from trades in five firms, along with co-conspirators.

The perpetrators allegedly used derivatives to disguise bets that the shares would plummet after official announcements. They then allegedly sought to distribute the gains, estimated by the FCA as £1.5million, by money laundering.

The case, now referred to Southwark Crown Court, is fascinating. At stake is the prestige of the asset manager Janus Henderson. 

The contemporary nature of the offences, allegedly from 2019-21, and the comparatively low profits add interest.

Split among several parties, the gains are modest in a world when debt is counted in billions, and the alleged wire fraud of bitcoin whizz Sam Bankman-Fried of FTX is in the billions.

If the criminal prosecution has the effect of putting off other potential miscreants and encouraging better market hygiene it will be more than worthwhile.

Taking off

The gap between the upbeat sales and profit figures of British commerce and the official and survey data is a puzzle.

After the tearaway Christmas sales figures from retailers (continuing to roll in), airlines are demonstrating that traffic is soaring. 

Putting three years of largely Covid-19 related losses behind it, no-frills carrier Easyjet is forecasting a return to profit this year, sending the shares 10 per cent higher.

Over the last three weekends, passenger numbers have hit record levels. As the summer approaches, Easyjet is rolling out ever more flights. 

Personally, I was amazed to find that a flight to a Canary Islands destination next month was almost booked out.

Consumer confidence, according to surveys, has been, and remains, at a low ebb.

The Bank of England has been frightening the country with its warnings of a squeeze on real incomes.

Really? Easyjet chief executive Johan Lundgren says he is surprised by the resilience of demand. He is not alone. 

Ryanair last week announced record bookings and the shares of all the UK and Ireland-based carriers have been rising strongly.

That does not mean all is running smoothly. As a BA passenger to Prague on Sunday, I was held up for four hours amid a succession of ever less believable excuses ranging from a crew member stuck in Edinburgh, to fog, ice and missing documents.

We were then comforted on board by the slimmest bottle of water ever seen and a food service which consisted of half a dozen mini-pretzels.

If BA shrinks it any further, the bag will be empty. So much for that old, vanishing friend: customer service.

Ice breaker

As a behemoth of Britain’s general insurance sector, with 10 per cent of a competitive market, the fear among Aviva investors was a big hit to its property cover from the December cold.

In the event, it was around £50million. This is an improvement over the £90million hit at Direct Line, which tanked the shares. The suspicion is that after several profit warnings Direct Line did some kitchen sinking.

Aviva’s better underwriting and risk performance hopefully will mean it can build loyalty by holding premiums down.

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