Treasury denies insider dealing after disclosure of bank secrets

The Times, 13.10.16


The Treasury and the Financial Conduct Authority have denied an accusation of insider dealing after it emerged that they exchanged confidential information about a regulatory investigation into Royal Bank of Scotland.


Before the partial sale of the government’s stake in RBS, John Kingman, one of the Treasury’s top civil servants, sought and was provided with secret details about the timing of an FCA report into the activities of the bank’s global restructuring group (GRG).


Martin Wheatley, then boss of the City regulator, sent Mr Kingman a list of dates “relating to the potential publication and disclosure of information concerning the ongoing review of RBS”, emails obtained by Buzzfeed, the news website, revealed.


As he provided a timeline in an email on July 3, 2015, Mr Wheatley wrote: “You asked for this information in the light of potential sales of RBS shares.”


He urged Mr Kingman to “ensure [the information] is kept confidential” because “it is not in the public domain”.


The government sold a £2.1 billion tranche of RBS shares at a loss on August 4 last year, about two weeks before a possible announcement about the restructuring group’s investigation that it learnt about from Mr Wheatley.


The FCA investigation is expected to be critical of how RBS treated small businesses and could lead to fines and legal action against the bank. It has the potential to depress RBS’s share price.


The FCA report has been subject to a series of delays and has still not been published.


The Treasury strenuously denied any wrongdoing. It said it contacted the FCA to ensure the regulator was not planning “major market-moving announcements” or supplying price-sensitive information to RBS or government officials in the window when it planned to sell shares.


The regulator refused to provide information about the GRG investigation to the Business Department last year, which had played a role in commissioning the report.


Tom Scholar, permanent secretary to the Treasury, told MPs yesterday : “I am quite clear that our guidelines were not infringed. These are allegations which we regard as completely without foundation.


“The actions of Mr Kingman in getting in touch with Martin Wheatley at that time were . . . to make sure that the Treasury was filling its statutory obligations and legal responsibility not to proceed with a sale with any inside information.” Mr Scholar said such correspondence would only have constituted insider information if the Treasury had been given information about the nature of the FCA’s findings.


A spokesman for the FCA said the emails did not contain “any price-sensitive information or inside information”.


John Mann, the Labour MP and treasury committee member, said the FCA had provided a “running commentary” on the timeline of the investigation, adding one of the email exchanges “references the chancellor and his interest in the area so we have a politician clearly pressuring in relation to [obtaining] this information. Some might call that insider dealing.”


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