Sharing confidential information
sharing confidential information which is potentially price sensitive with others within or outside the firm
When dealers receive large client orders which have potential to influence market price, they may share that information with others within or outside the firm to enable them to front run these client orders.
Employees from competing firms may also share confidential pricing information, for example, on typical spreads or commissions. This is anti-competitive behaviour against anti-trust rules.
Effective implementation of surveillance alerts for sharing confidential information requires capturing the following trade data:
Effective surveillance should focus not only on communications data but also on identifying large orders or transaction with high inherent risk of front running. Once such large orders are identified, a targeted communication search can be performed across all possible communication channels including mobile phone and various chat and messaging applications.
A great account of the largest insider trading investigation in the history of Wall Street.
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