The London Paper – 9 July 2007
Last week John Tiner, the outgoing head of City regulator the Financial Services Authority, exclaimed in a major interview in the Financial Times that insider trading is still ‘rife’ in the Square Mile. He later went on to make the equally controversial claims that bears sometimes defecate in forests and that Dolly Parton generally sleeps on her back. There are even rumours that due to the freedom afforded him by his imminent departure that he’s going to really put his neck on the line and argue that frogs have watertight arseholes.
When I hear the City regulator periodically complain about the extent of insider trading in the City and how easy it is for any Tarquin, Ricardo or Harry to perpetrate I can’t help but feel that once again my precious time is being wasted. Everyone in the City knows it goes on and everyone realises that there’s bugger all you can do about it. That’s because there are too many people involved in preparing for the dissemination of non-public price-sensitive information. For example, the average take-over of a company requires weeks of work by corporate financiers, accountants, lawyers, PR advisers, printers etc before the actual announcement. Since human nature hasn’t moved on since Alexander Pope first declared “to err is human” 300 years ago it is natural that several greedy bad apples will choose to profit from their inside information and, using an anonymous mobile phone or email address, get their long-lost auntie Marge or some loosely-connected chap abroad to buy shares in the company being acquired. This behaviour is why shares in companies about to be acquired almost always rise in the 2 or 3 days before the formal announcement.
The problem is that there is no disincentive to naughtiness. The chances of being successfully prosecuted by the FSA can be likened to Fern Britten’s chances of winning ‘rear of the year’ or Steve “interesting” Davis’ prospects of being named ‘sports personality of the millennium’. The only way to lessen the frequency of this malpractice is to get some high profile prosecutions and punish the wrongdoers severely.
My personal solution may seem a tad radical but it is based on the established principal that ‘the punishment should fit the crime’. Since most insider trading involves stocks I believe that successfully prosecuted insiders should be physically placed in stocks – ideally outside the Bank of England. We should then all be allowed to throw whatever we can find at these greedy tossers. I am willing to publicly promise now that if the FSA take on my admittedly controversial idea that I will make every effort to be the first in the queue every time. My only concern about my plan is that it will be so popular that I’ll be queuing up all day and hence I won’t be able to spend anytime in my ever-exciting office environment … on second thoughts, that’s a sacrifice I’m just about willing to make.