One of the City professionals arrested this week in the Financial Services Authority's insider dealing swooptoday broke his silence yesterday to protest his innocence.
Julian Rifat, the trader at hedge fund Moore Capital who was among seven men arrested after a dawn raid on Tuesday, said through his lawyers that he was "deeply distressed" by the allegations.
"Mr Rifat denies the allegations that have been made against him. He has not been charged with any offence," his lawyers at Kingsley Napley said.
"Mr Rifat is deeply distressed by the accusation and is working to clear his name as soon as possible. It would not be appropriate for us or for him to comment further at this stage in light of the fact that the investigation is ongoing."
None of the other men arrested in the operation that involved 143 FSA officials and officers from the Serious Organised Crime Agency have been charged with any insider dealing offences.
Few details have been released by the authorities about the nature of their investigation, other than the acknowledgement by the FSA that it believes the City professionals passed inside information to traders – either directly or via middlemen – who traded based on this information and have made significant profits as a result.
There were suggestions today that the FSA was also trying to establish whether use was made of front-running of block trades, which would essentially mean trading before huge orders were placed on behalf of institutional clients.
The FSA has pledged to clean up so-called "market abuse" in the City, particularly insider dealing, which allows people who have information not widely known to the market to make a profit by dealing before official news breaks. The regulator suspects much of it takes place ahead of takeover offers as people expecting a deal to be announced could buy the shares and sell them for a profit when they rally once the takeover is confirmed.
The FSA is expected to charge up to 11 people in another alleged insider dealing ring next week. The group has been under investigation since eight were arrested in 2008. The operation, said to be codenamed Saturn, has involved looking into whether formal bank documentation about deals was used to facilitate insider dealing.
This group is unconnected to Tuesday's raids by the FSA in which professionals from well-known City firms were arrested from addresses around the country. While the FSA had not named any of them, their identities are now known to be Rifat, Martyn Dodgson of Deutsche Bank, Clive Roberts of stockbroker Exane, Graeme Shelley of Novum Securities, Iraj Parvizi, a director of Aria Capital and Ben Anderson, a veteran trader who is said to have been arrested at Gatwick airport after voluntarily returning to the UK.
The FSA has said it believed this was a "sophisticated and long-running insider dealing ring" which had allowed its members to make "significant profits".
