U.K. Investigates Leaks in Insider Trading Probe
Britain’s top law-enforcement body examining allegations that translator was paid to tip off target of investigation
LONDON—The U.K.’s top law-enforcement body is examining allegations that an employee leaked information to a suspect in exchange for money, undermining a probe into a suspected network of European insider traders, according to people familiar with the matter.
The internal corruption unit of the National Crime Agency, the U.K.’s equivalent of the Federal Bureau of Investigation, is assessing whether a government translator who had access to wiretap recordings tipped off the target of an insider-trading investigation. This person may have worked with others in the agency to attempt to disrupt the probe, the people said.
If confirmed, the breach could become a black eye for U.K. investigators, who have had a patchy record prosecuting white-collar crimes since the 2008 financial crisis.
The U.K. government set up the NCA in 2013 in part to improve investigations of financial crimes in the years after the financial crisis. Such cases are split among multiple agencies in the U.K., including the Serious Fraud Office and Financial Conduct Authority. The NCA often works with the FBI while the U.K.’s Financial Conduct Authority, its lead financial regulator, works closely with the Securities and Exchange Commission.
A National Crime Agency spokesman said: “We do not routinely confirm or deny the existence of investigations.”
U.K. law enforcement has devoted more attention to financial crime in recent years, with limited outcomes. The FCA has opened 172 insider-trading cases since the 2014 financial year, and only three have resulted in regulatory action, according to FCA data. Insider-trading cases typically take years; the FCA’s biggest recent case against two bankers resulted in a conviction in 2016 over trading that took place between 2006 and 2010.
The FCA declined to comment.
The leaking allegations that the NCA is examining have their roots in an investigation begun in 2013 that grew to include monitoring a network of people allegedly involved in using illegal tips to trade stocks, the people familiar with the matter said. That underlying investigation has led to at least one prosecution.
The name of the translator couldn’t be learned, nor was it apparent whether she is still working for the agency or has been disciplined in any way. It couldn’t be determined when exactly the leaks happened.
One of the suspects in the alleged insider-trading ring wrote a letter to himself that he hid under a carpet in his home before his arrest. In the letter, reviewed by The Wall Street Journal, he described how another suspect told him of a joint NCA investigation with the FCA into their trading.
The other suspect told him he had “three people working for him at the agency,” according to the letter, referring to the NCA.
That suspect told him that a translator working with investigators contacted him through a party known to both of them, according to the letter and people familiar with the matter. The translator tipped him off about the investigation and subsequent discoveries by investigators, including what the other suspect was saying on the phone, the letter and people said.
The other suspect said that they could pay off NCA officers working on the case by transferring money to a bank account in Macau, according to the letter.
In recent years, British authorities have faced setbacks in several high-profile cases involving financial crimes. This year a court rejected the SFO’s effort to bring criminal charges against Barclays following an investigation into the bank’s loan practices. Like its peers in the U.S., U.K. law enforcement has also struggled to prosecute high-ranking officials inside companies, according to Jonathan Fischer, a visiting professor of financial crime at the London School of Economics.
“Those failures give the impression that the U.K.’s response to financial crime is very weak,” he said. “For bigger cases, they are narrowly focused and lack resources.”