ALEX BRUMMER: FCA ripples its muscles over insider trading

Insider trading is one of the city’s oldest crimes. Hardly any takeover takes place without a rise in the price of the target company beforehand.

Advisors try to prevent leaks through the use of codenames and meetings in secret locations, but it is impossible to close all the holes.

Lately, the ritual of ‘capital markets days’ has developed and important information is being shared with major battalion investors and analysts.

This may give financial professionals an edge over retail investors. With the exception of deliberate deception, such as using burner phones, technology ensures that financial insiders know all too well how compliance officers and regulators gain access to communications.

The delete button can be pressed, but the trace is still present on the hard drive or in the cloud.

It is relatively rare for employees of a large financial company to stand before the defendants on hard-to-prove insider allegations.

The Financial Conduct Authority (FCA) often gets into trouble over its sclerotic approach to justice. I think of the fact that a report was not issued in time on the implosion of Neil Woodford’s fund management empire.

So it’s fascinating to see the FCA launch a criminal action against former Janus Henderson analyst Redinel Korfuzi, who is accused of profiting from transactions in five companies along with co-conspirators.

The perpetrators allegedly used derivatives to hide bets that the stock would plummet after official announcements. They then attempted to distribute the profits, estimated by the FCA at £1.5 million, through money laundering.

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

The contemporary nature of the crimes, reportedly from 2019-21, and the relatively low profits add interest.

Divided across parties, profits are modest in a world where debt counts in the billions, and FTX bitcoin expert Sam Bankman-Fried’s alleged wire fraud runs into the billions.

If the criminal prosecution deters other would-be miscreants and encourages better market hygiene, it will be more than worth it.

To take off

The gap between the optimistic UK trade sales and earnings figures and the official and survey data is puzzling.

Following the overwhelming Christmas sales figures from retailers (which continue to pour in), airlines are showing that traffic is booming.

After pulling off three years of largely Covid-19-related losses, no-frills airline Easyjet is forecasting a return to profit this year, sending shares up 10 percent.

Passenger numbers have reached record levels over the past three weekends. As summer approaches, Easyjet is rolling out more and more flights.

Personally, I was surprised to discover that a flight to a destination in the Canary Islands was almost fully booked next month.

Consumer confidence was and is at a low ebb, according to surveys.

The Bank of England has been scaring the country with warnings of pressure on real incomes.

Actually? Easyjet CEO Johan Lundgren says he is surprised by the resilience of demand. He’s not alone.

Ryanair announced record bookings last week and shares of all UK and Ireland-based airlines have risen sharply.

That is not to say that everything is going smoothly. As a BA passenger to Prague on Sunday, I was held up for four hours amid a succession of increasingly less credible excuses, ranging from a crew member trapped in Edinburgh to fog, ice and missing documents.

We were then comforted on board by the thinnest bottle of water ever seen and a food service consisting of half a dozen mini pretzels.

If BA shrinks it even further, the bag is empty. So much for that old, disappearing friend: customer service.

Icebreaker

As a behemoth of Britain’s general insurance industry, with 10 per cent of a competitive market, the fear among Aviva investors was a major blow to cold December property cover.

In the case it was about £50 million. This is an improvement on the £90 million hit at Direct Line, which brought shares down. It is suspected that Direct Line made some kitchen mistakes after several profit warnings.

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