This is a guest post by Eric Odotei, Finalto Group Head of Regulatory Reporting

Two independent traders have been fined £280,000 in total and given suspended prison sentences for insider dealing, after a case brought by the Financial Conduct Authority (FCA). The individuals were not employees of a regulated firm, nor were they operating within the structured confines of a financial institution. They were self-employed day traders, acting alone. Yet the FCA’s message could not be clearer: no participant in the financial system is outside its jurisdiction, and no firm should underestimate the continued focus on surveillance failures and market abuse.

A Calculated Abuse of Broker Trust

Between 2016 and 2020, brothers Matthew and Nikolas West exploited confidential, price-sensitive information provided under legitimate “wall crossing” arrangements. Matthew West, with over twenty years of experience in trading, was approached by brokers as a potential investor in upcoming capital raises. These opportunities, often concerning companies listed on the Alternative Investment Market, were subject to strict confidentiality conditions.

Instead of observing those obligations, Matthew passed the information to his brother Nikolas. The two then coordinated trades in the period before the public announcements were made. Messages between them revealed how they discussed timing and strategy in order to maximise profit. The resulting gain exceeded £44,000.

Although their personal profit was modest compared to larger market abuse cases, the penalty was not based on profit alone. The confiscation order reflected the full value of all trades conducted using inside information, not just the margin made. The final figure amounted to over £280,000, which the court required to be paid within 14 days. Failure to pay would result in additional custodial sentences.

• Matthew West received a 15-month prison sentence, suspended for two years, and was ordered to complete 200 hours of unpaid work.
• Nikolas West received a six-month sentence, suspended for 12 months.

Both were also ordered to contribute over £50,000 towards prosecution costs.

Surveillance Must Evolve with the Risk

This was not a case of misconduct from within a financial institution. It was external, individual and opportunistic. That is precisely why it matters. The FCA is signalling that insider dealing remains an active threat across the financial ecosystem, and that firms must remain vigilant, regardless of where the risk arises.

The core message is simple: surveillance must evolve. Insider trading no longer depends on a private conversation in an office. It can happen over text, voice note or encrypted chat. Regulators expect firms to monitor communications and behaviours that extend beyond traditional systems.

Firms should be prepared to demonstrate the following:

• Full capture of all communications across all platforms used for business
• Monitoring systems capable of detecting evasive language and unusual behavioural patterns
• Proactive review and calibration of alert logic and escalation procedures
• A compliance culture embedded from the top, with leadership visibly committed to ethical standards

Legal and Regulatory Framework

This case also reinforces the legal obligations under the current regulatory regime. Firms must already comply with the requirements of the UK Market Abuse Regulation, which mandates the prevention and detection of insider dealing. This includes maintaining detailed insider lists, controlling access to confidential information, and ensuring accurate and timely public disclosures.

In addition, the FCA’s Handbook, particularly SYSC 10A, requires firms to record and monitor all relevant communications. Market Watch 79 further emphasised these expectations, highlighting recurring failings in alert calibration, surveillance oversight and the handling of off-channel communication.

These are not abstract requirements. They are active areas of regulatory scrutiny. The FCA has demonstrated its ability to detect suspicious trading activity through market surveillance tools, and is following through with public enforcement and criminal sentencing.

Market Integrity Requires More Than Policy

This case also presents a broader challenge for firms: ensuring that policies and procedures are not only in place, but effective in practice. The misuse of broker information by the West brothers highlights the importance of understanding how sensitive information moves, who has access to it, and how it may be misused even by those not directly employed by a firm.

Trading behaviour does not occur in a vacuum. It is shaped by communications, decisions and timing. Surveillance that is limited to trade data will miss the crucial context that explains intent. Firms need to connect communication surveillance with behavioural indicators, cultural signals and transaction data to build a holistic view of risk.

Insider dealing is not an abstract threat. It remains a live issue. The FCA’s stance is clear: financial markets must operate fairly, and any action that undermines that integrity will face serious consequences.

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