FCA Raises Alarms Over Increasing Information Leaks in UK Corporate Takeovers

The UK's Financial Conduct Authority (FCA) has raised significant concerns over the increasing prevalence of information leaks in corporate takeovers, highlighting potential threats to market integrity and investor confidence.

Between April 2024 and May 2025, 38% of deals involving UK-listed firms were reported by the media prior to official announcements, surpassing the global average of 31% for deals exceeding $1 billion in 2024. The FCA attributes many of these leaks to "strategic leaks," where companies deliberately disclose information to influence takeover discussions. This trend is also associated with a rise in unusual trading activity before deal announcements, suggesting potential insider trading. In 2024, 38% of UK takeover announcements were preceded by abnormal price movements, up from a five-year average of 32%.

The FCA has initiated 33 investigations into potential market abuse since 2020 and has engaged with top investment banks, issuing formal warnings to mitigate this issue and safeguard the transparency of the London stock market.

In March 2025, the FCA published Primary Market Bulletin 54, highlighting concerns over the increase in deliberate leaks of material information during live M&A transactions. The bulletin emphasized that such leaks can cause significant share price movements and damage market integrity. The FCA reminded firms that unlawful disclosure of inside information is prohibited under Article 14 of the UK Market Abuse Regulation (UK MAR) and that breaches can result in unlimited fines, injunctions, or prohibitions for regulated firms or approved persons.

The FCA's Market Cleanliness (MC) statistic for 2024 was 37.8%, with a five-year moving average of 32%. The MC statistic measures the proportion of corporate takeover events with significant abnormal share price movements before the announcement. The methodology was updated in November 2024 to provide a more accurate measure, though it still has limitations as a broader measure of market cleanliness.

In 2023, indications of potential insider trading declined to a five-year low, with abnormal trading volumes detected ahead of 5.6% of price-sensitive announcements, the lowest since data collection began in 2018. However, suspicious stock market moves still occurred before 30.3% of UK takeover announcements, down from 35.3% a year earlier. This decline followed the FCA's first two convictions for insider trading since 2019.

The UK Market Abuse Regulation (UK MAR) prohibits the unlawful disclosure of inside information. The Takeover Code's Rule 2.1(a) requires that confidential information concerning an offer or possible offer must be treated as secret and only shared when necessary, with measures to minimize the chances of any leak.

The increase in strategic leaks and associated unusual trading activity undermines market integrity and investor confidence. It creates an uneven playing field, where certain investors may gain unfair advantages based on leaked information. This behavior can deter investment and harm the reputation of the UK financial markets.

The FCA's recent findings highlight a concerning trend in the UK financial markets, where strategic leaks and potential insider trading are on the rise. The regulator's proactive measures aim to address these issues, but the effectiveness of these interventions remains to be seen. Ensuring market integrity is crucial for maintaining investor confidence and the overall health of the financial system.