This morning’s newspapers reported that the FSA (Financial Services Authority) in the UK are determined to stamp out insider dealing, in particular in connection with mergers and acquisitions. Oh look there’s a pig flying across the sky!
They say that “Combating market abuse is one of the FSA’s top priorities and we are committed to working in partnership with the industry to reduce the incidence of market abuse on the UK’s markets.”
Insider dealing goes on in a number of ways and i am amazed the FSA has only identified four cases in the recent avalanche of mergers and acquisitions. The most straightforward is simply to buy shares either directly or by proxy in a company due for either a takeover or merger. However, a cursory glance at the director’s dealings would soon give this away, therefore spreadbetting the shares or buying out of the money calls would also reap big rewards.
“Market abuse” happens every minute of every hour in the financial markets worldwide and the sooner we all accept this is a fact the better. The irony is that it has been the advent of the internet and instant access to these very markets which has revealed the extent to which the markets are manipulated. As traders and investors this gives us a tremendous advantage – forewarned is forearmed!