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Exploring ethics and insider lists

Selina Sagayam, UK M&A adviser and partner at Gibson Dunn, explores the issues involved in preparing and maintaining insider lists and how to ensure compliance and maintain UK securities market integrity. She uses the four Ps to make it memorable: Purpose of insider lists; Principal obligations; Problems in practice; and Practical considerations

Corporate Financier imageThe UK’s Financial Conduct Authority (FCA) published its first ‘market cleanliness’ metric in 2008, revealing 30% of takeovers had seen abnormal price movements two days prior to announcement. By 2019, this figure stood at 10%.

The FCA’s new ‘fairer’ abnormal trading volume ratio is 6.4% for 2019. It puts this drop down to enhanced detection methods, increased high-profile enforcement and its work to ensure that market participants “behave properly in preventing abuse, protecting inside information from leakage and misuse, and reporting suspicious activity”. The obligation for insider lists has been key to the FCA’s enforcement strategy. It has helped enhance the care taken when handling inside information.