In March 2009, UK securities regulators began to crack down on insider trading with the FSA's first-ever criminal conviction of Christopher McQuoid, former general counsel of TTP Communications, and his father-in-law, James Melbourne. Also that month, the FSA's CEO, Hector Sants, promised a new aggressive approach to enforcement in the UK. “There is a view that people are not frightened of the FSA,” he said. “I can assure you that this is a view I am determined to correct. People should be very frightened of the FSA.” Following that first conviction, the FSA (and now its successor agency, the FCA) has continued to pursue insider trading, and has obtained almost two dozen convictions as of the end of 2013.
This week, a paper published by the FCA found that insider trading has declined sharply since 2009, with abnormal share price movements before takeover announcements dropping from 30 percent of takeovers in 2009 to 15 percent in 2013. What caused the decline? The FCA was not able to answer this question, but it did note the possibility that regulators' increased enforcement beginning in 2009 could have played a role:
We recognise that, at this stage, we do not know whether the FSA/ FCA's actions are driving the improvement in the measure but the increase in the FSA's enforcement activity and educational agenda and decrease in the market cleanliness statistic are roughly contemporaneous.