Massive advance trading by two buyers and a delayed announcement of Lloyds’ takeover of HBOS is expected to lead to an an FSA investigation into insider trading in HBOS shares. Standard Life Investments, one of the biggest institutional shareholders in HBOS, stated yesterday that the news that the bank was being bought by Lloyds “came out inappropriately.” Details of the takeover talks between Lloyds and HBOS were announced by the BBC on Wednesday morning at 9am, sending shares soaring, but the deal was not formally announced until four hours later according to the Telegraph.
The FSA is expected to look closely at the huge trades and profits made by traders in two minutes of trading immediately before BBC broke the news. According to the Telegraph, “in two trades at 8:57am and 8:58pm, two buyers alone acquired more than 20m HBOS shares at 96p. In total, around 160m shares changed hands in the moments before the takeover was announced, making a paper profit of nearly £190m for the traders and leading to suspicion of a leak.”