S&N takeover deal at centre of massive City insider trading case

Published on Monday 29 March 2010 23:17

THE £7.8 billion takeover bid that ended 260 years of independent trading for Scots brewer Scottish & Newcastle is at the heart of a major City of London insider trading investigation.

The Financial Services Authority and Serious Organised Crime Agency inquiry is the largest ever to investigate dealers trading in shares while in possession of secret price-sensitive information.

It is understood the investigation involves linked chains of individuals allegedly making up to 20 million from share dealing.

The alleged ring is suspected of making about 4m alone from trading in S&N shares during its takeover by rivals Carlsberg and Heineken in early 2008.

An FSA spokesman said the financial regulator could not comment on the investigation. And a Soca spokesman said: "It's an ongoing investigation and anything related to the sensitivity inherent in it would be inappropriate to comment on."

The FSA confirmed last week that it raided 16 addresses in London, the South-east and Oxfordshire "in the FSA's largest- ever operation against insider trading". Seven individuals were arrested, but it is believed none has yet been charged. The regulator said that documents and computers had been seized from residential and business premises.

It also said the men arrested included two senior employees at leading City institutions and one at a hedge fund. They had been arrested on suspicion of being involved in a "sophisticated and long-running insider dealing ring", the FSA said.

The regulator says it is believed that City professionals passed inside information to traders, either directly or via middlemen, who then traded based on this information and made "significant profits" as a result.

The inquiry centres on trades made between 2007 and 2009. It is thought to include profits made on dealing in Barclays shares in 2008, when it raised almost 12bn in fresh capital, much coming from Middle Eastern and Asian investment groups.