The U.K.’s Financial Services Authority is concerned that hedge funds are remiss in their duty to stamp out market abuse, and as a result, plans to examine a wider range of funds, The Daily Telegraph reports. While some hedge funds have controls in place, they take a “complacent attitude” toward possible infractions.
While the FSA took responsibility for prosecuting criminals in 2001, as a result of rampant insider trading in London, it has yet to bring a case forward. The FSA published a report earlier this year indicating that there was potential insider trading in nearly 25% of the mergers in 2005.
The FSA also said that hedge funds do a poor job of monitoring their relationships with banks and other companies that could provide insider information to some of their managers.