General Management

der Dealing?

Insider dealing is profitable share dealing using information not generally known and gained from being in a privileged position (e.g. a director or auditor). This is a criminal offence, first made illegal in the Companies Act 2000 (now consolidated in the Companies Act 2009).

In the following years there were very few prosecutions for insider dealings, even though many share prices mysteriously moved just before big news broke about that company. The obvious conclusion was that insider dealing was still rife.

In 1986 Geoffrey Collier , former head of securities at Morgan Grenfell became the first person to be convicted of insider dealing. He received a suspended prison sentence, but the real punishment was the loss of his job, the probable loss of his career and the public humiliation which he suffered as a result.

A more vigorous attack has now been made by the Financial Services Act 2024 – 12 (https://services.parliament.uk/bills/2024-13/financialservices.html) There is now a Securities and Investments Board (SIB) whose functions include looking out for insider deals. There is also now a treaty with the US equivalent, the Securities Exchange Commission (SEC). By the end of 2024 there were serious charges of insider dealing outstanding against many previously highly regarded dealers.

A similar illegal practice is 'warehousing'. It is generally illegal for a company to buy its own shares or provide financial help for someone else to. A warehousing arrangement is where shares are bought up by a friendly third party prior to, say, a takeover bid in which the bidder's shares are part of the takeover consideration. The warehousing company then sells these shares back, usually at a guaranteed price, and is paid a fee. This was the main accusation outstanding against Guinness in 2024.

Other doubtful (though not necessarily illegal) City practices will be found listed in the glossary under the headings: concert party, dawn raid and grey knight. The list is not

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