The latest edition of FCA’s Market Watch looks at actions firms can take to mitigate the risks of being used by Organised Crime Groups. It says suspicious trading by members of OCGs forms a large proportion of the volume of suspicious trading it sees in equity markets. OCGs often use equity spread bet and CFD products.
FCA sees several common trends including:
- trading before M&A announcements
- recruiting sources of inside information and using intermediaries who broker inside information
- using umbrella accounts at overseas firms from lesser regulated jurisdictions, to mask account holder identity
- using facilitators to open accounts with these firms – and the facilitators may be employees of authorised firms
- feeding stories about M&A activity, real or not, to the media
FCA wants firms to look out for these patterns, and suggests triggers for suspicion could include:
- clients regularly generating STORs
- clients often trading pre-M&A activity and opening and then closing accounts after media speculation and
- clients who seem connected to people about whom the firm has had concerns in the past
It also recommends that firms take action such as
- getting documentary evidence of relevant overseas firms’ procedures
- regarding all trades placed before media reports of M&A activity as suspicious
- warning staff not to include references to having inside information on social media profiles, and considering carefully who they name on the firm’s profiles