FCA urged to investigate whether Tory allies shorted pound on insider info
The City watchdog is being urged to investigate whether leaks of Kwasi Kwarteng’s mini-budget allowed billionaire hedge fund investors to make “small fortunes” by betting against the pound.
Tulip Siddiq, the shadow economic secretary to the Treasury, said the Financial Conduct Authority needed to determine whether it was possible for traders to have used insider information to benefit from the crashing currency.
The pound fell to an all-time low of $1.03 against the dollar overnight on Monday before recovering lost ground amid speculation that the Bank of England would raise interest rates to shore up the economy.
Siddiq told the Evening Standard there was a case for regulators to ensure that investors with close links to the Conservatives had not benefited from leaked details of Kwarteng’s mini-budget.
“The FCA should investigate any potential wrongdoing, to determine whether it is possible that any leaks or information provided by this Conservative government to their wealthy friends contributed to the collapse of the pound,” she told the paper.
“A weaker pound means that imports such as food and energy will become even more expensive, at time when inflation and the cost-of-living crisis are already spiralling out of control.”
The pressure on the City watchdog comes amid volatile trading in financial markets. Some analysts expect the impact of Kwarteng’s £45bn unfunded tax cuts directed at higher earners to push the pound closer to parity with the dollar. Investors also bet that the Bank of England will be forced to raise interest rates above 5%, up from the current level of 2.25%, by February.
Threadneedle Street said after the stock market closed on Monday it would hold off from making a fresh decision on interest rates
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