City nears 'all clear' on pre-carnage tradesBy George Trefgarne, Financial Correspondent (Filed: 25/09/2001) THE Financial Services Authority has nearly completed its investigation into possible insider trading before the New York terrorist attacks and is on the verge of giving the City a clean bill of health. Sir Howard Davies hopes to be able to sound the all clear this week. The news will be a relief to the City. There have been fears that terrorists used their knowledge to make profits by selling airline and insurance stocks and buying gold. Regulators in New York have been investigating huge short selling orders - where investors gamble that shares will fall - in American Airlines and United Airlines. In London, the Liffe futures exchange was concerned about unusual movements in options based on British Airways shares. Hundreds of FSA staff have been involved in the 10-day investigation. They have called about half of the 8,500 financial firms regulated in the UK and asked them to check their records. The operation has been co-ordinated by Carol Sergeant, the FSA director in charge of regulation. The FSA would not comment yesterday, but one source close to the investigation said: "Nothing really has been turned up here. For every trade there has been an explanation like a broker sell note. If there was anything behind all this, they would have found it by now." The source said: "I wouldn't say it's been a red herring." A big chunk of Middle Eastern money is managed out of London and there were natural fears that the City might be involved in any suspicious trades. Didier Reynders, the Belgian finance minister, pointed the finger over the weekend, saying: "There are very strong suspicions in Great Britain at the moment." The fact that no insider trading has been found may be seen as a partial vindication of existing money laundering rules, which work on the "know your customer" principle. Nonetheless, Gordon Brown has said he wants to tighten them up. However, London is not completely off the hook. A separate investigation run by the National Criminal Intelligence Service to see if any terrorist assets are invested or managed in London is continuing. If there is anything of which financial firms are suspicious, they must file a report to the NCIS which may then alert S0-13, Scotland Yard's anti-terrorist unit.
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