the times | Monday June 13 2022 21
News
COASTAL JJ/BAV MEDIAWhen Fabiana Abdel-Malek, a banker
at UBS, and her friend Walid Choucair,
a day trader, were convicted of insider
dealing in 2019 their gilded lives were
shattered.
Abdel-Malek, 40, was in a well-paid
role as a senior compliance officer at
the investment bank, and Choucair, 43,
made millions dealing complex finan-
cial derivatives. Their case featured evi-
dence of “burner” phones, a company
listed in the British Virgin Islands and
meetings at Tramp, the upmarket
London club.
Abdel-Malek used her position to
obtain market-sensitive information
and passed it to Choucair, who made
trading profits of at least £1.4 million
from the data. They were jailed for three
years and a confiscation order demand-
ed the return of their illegal profits.
What neither of them could have
realised was how unlucky they had
been to find themselves in the dock.
A freedom of information (FOI) re-
quest by The Times to the Financial
Conduct Authority (FCA) shows that in
the past five years they are the only
people to be convicted of insider deal-
ing. This is despite market data showing
the crime is so prevalent that share
prices in nearly one in five takeovers are
subject to “significant abnormal move-
ments” before an announcement.
Between 2012 and 2016 the chief City
watchdog secured 20 convictions, com-
pared with two in the past five years.
Prosecutions have fallen to an average
of one and a half cases a year. By com-
parison, the Department for Work and
Pensions initiates about 8,000 prosecu-
tions for benefits fraud every year.
Part of the explanation seems to be
that the watchdog has slashed the num-
ber of staff tackling insider trading. The
FOI request, which the FCA had tried
to block, shows the number of investi-
gators working on insider dealing fell
from 79 in 2017 to 37 last year. Yet the
Rampant scammers cash
in on cost-of-living crisis
Millions more people have been target-
ed by fraudsters as the cost of living
soars, research suggests.
More than three quarters of adults
surveyed in the UK said they had been
targeted by a scammer this year, a 14 per
cent increase on this time last year,
Citizens Advice found.
The most common types of scams
include deliveries, postal or courier ser-
vices (55 per cent); someone pretending
to be from the government, particularly
HM Revenue and Customs (41 per
cent); and someone offering a fake
investment or “get rich quick” scheme
(29 per cent).
Households are due to receive pay-
ments to help with the cost of living and
Citizens Advice cautioned that it had
seen several associated scams, including
emails claiming to be from Ofgem
asking people to enter their bank details
to receive the £400 energy rebate.
Dame Clare Moriarty, the chief
executive of Citizens Advice, said: “We
know scammers prey on our worries
and fears and the cost of living crisis is
no exception. As financial pressures pile
on, it’s more important than ever we
recognise the red flags. By reporting
scams... we can work together to pro-
tect ourselves and each other.”
Wendy Martin, the director of
National Trading Standards, said:
“Criminals are exploiting people’s wor-
ries as household bills rise. Consumers
are being put under increasing pressure
from a wave of scam emails and cold
calls from imposters pretending to be
from councils or energy companies.
“We urge people never to give bank
details or other personal information to
anyone who contacts them out of the
blue, as legitimate organisations would
never put you on the spot in this way.
“Everyone can arm themselves with
the information they need to stay safe
by taking part in our free Friends
Against Scams awareness training at
friendsagainstscams.org.uk.”Only two insider
traders caught
by City watchdog
in half a decade
number of whistleblowers reporting
suspicions of insider dealing to the FCA
nearly doubled between 2017 and 2021
compared with 2012-17.
Experts say part of the problem is the
complexity of cases and the resources
needed to gather evidence and launch
prosecutions. Most of the accused can
afford to instruct expensive defence
lawyers and have made considerable
efforts to disguise their activity.
However, the FOI data will raise
questions about whether the watchdog
is dedicating resources commensurate
with the scale of the problem.
Stopping insider trading is consid-
ered important because the practice
undermines confidence in markets.
Institutional investors spend huge
amounts of time and money on legiti-
mate research into companies, using
publicly available data. This helps to
price shares accurately but it would
probably disappear if insider trading
were made legal because nobody could
compete with insiders’ knowledge.
Insider trading puts private investors
at a disadvantage because they will
never get the information and so find it
harder to make money from shares.
The result is they are likely to stop
investing in the markets. Fewer market
participants would make stocks harder
to sell, which in market-speak means
liquidity falls. Lower liquidity means
lower share prices because investors
demand greater compensation because
of the risk they won’t be able to sell.
The FCA did not explain why prose-
cutions and convictions had fallen so
much but said a significant amount of
its work now went on prevention.
In a statement, it said: “The work we
do to combat market abuse is some of
the most data-driven work that we do,
with people across multiple teams,
including in the data and technology
department, supporting the efforts to
combat market abuse. The number of
people who work on market abuse isn’t
reflected in the headline figures.”Andrew Ellson
Golden days Sunrise at Selsey, West Sussex, yesterday. A heatwave is expected to begin on Wednesday. Full forecast, page 51