FSA Says No Insider Trading Prior To Terrorist Attacks

by Philip Morton, Investors Offshore.com

18 October 2001

Following Wednesday's meeting with the Treasury Select Committee to discuss the Financial Services Authority's position and responsibilities in the international hunt for terrorist assets, the FSA chairman, Sir Howard Davies revealed that there had been no evidence found of insider trading taking place in Britain prior to the September 11th terrorist attacks.

Didier Reynders, the Belgian Finance Minister also confirmed this week that European investigations had not turned up any evidence of such activities within the EU, but said that investigations were continuing.

Sir Howard suggested at Wednesday's meeting that the most likely reason for the flurry of activity in the stocks of airline and insurance companies immediately prior to the attacks was aggressive trading by investment funds in anticipation of a global recession. He then revealed that a suspiciously large trade in British Airways stocks had been made by a rival airline trying to hedge itself against the possibility of an economic downturn.

Despite this somewhat reassuring news, however, the FSA chief cautioned against complacency, observing that in terms of anti-money laundering measures, London 'was not at the front of the leading pack'. He suggested that when the FSA receives its new powers of prosecution later this year, it may be possible to apply them retrospectively, if a financial institution is found to have been negligent at the time of the attacks.

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