MyComplianceOffice Blog

Employees who work at firms in the financial services industry are privy to sensitive information of all kinds. There are many ways for employees to abuse this information beyond garden-variety insider trading. As the ways bad actors can misuse information and manipulate the market getincreasingly sophisticated, the need for equally sophisticated compliance technology to keep up continues to grow.  

The European Market Abuse Regulations (MAR) have been in effect since July of 2016. Regulatory priorities in the UK and across Europe demonstrate that MAR is hardly old news, remaining a consistent focus since its inception. And regulatory enforcement shows that even eight plus years in, firms are still struggling to stay compliant with MAR regulations and the flow of insider information across their organizations.

A recent case in Hong Kong has sent a clear signal to financial firms about the dangers of failing to manage material non-public information (MNPI) effectively. The Market Misconduct Tribunal (MMT) ordered the wife of a chauffeur to disgorge $106,968 in illicit profit gained from the insider dealing activity.

Managing a financial trading control room involves balancing a wide variety of tasks. To comply with stringent rules and regulations, all deals must be carefully reviewed, the flow of information strictly managed, and an overarching focus on preventing conflicts of interest must be a constant. Without effective processes, a single deal can move slowly through the pipeline—and those delays aren’t beneficial for the firm’s bottom line. 

Insider trading cases have seen a variety of sentences over the years. However, some jurisdictions have recently increased their focus on these cases, seeing more convictions and higher sentences. Blackout periods are a critical component of any public company’s trading policy to minimise the risk of insider trading occurring.