Sunset at Tower Bridge Credit: Vic Thomasson, City of London

In the first operation carried out jointly between the UK's Financial Services Authority (FSA) and the Serious Organised Crime Agency (SOCA), 16 addresses were searched Tuesday morning in London, the South East and Oxfordshire in the FSA’s largest ever operation against insider dealing. The FSA says almost one-third of company announcements are preceded by abnormal share activity.

Documents and computers have been seized from residential and business premises. Six men including two senior city professionals at leading city institutions and one city professional at a hedge fund have been arrested on suspicion of being involved in a sophisticated and long-running insider dealing ring.

The FSA said it is believed that the city professionals passed inside information to traders (either directly or via middlemen) who traded based on this information and have made significant profits as a result. The operation was carried out by 143 FSA personnel together with officers from SOCA as part of a joint investigation that commenced in late 2007. Deutsche Bank’s London offices were among those raided  on Tuesday morning.

Among those under arrest is Julian Rifat of hedge fund Moore Capital.

Moore Capital, a prominent New York-based hedge fund with about $14 billion in assets under management, said UK authorities had executed a search warrant for documents related to an employee on its London equity-execution desk. Moore said the investigation doesn’t involve any of the hedge fund’s capital and that the firm “is cooperating fully with the FSA in its investigation.”

The Wall Street Journal reports that Clive Roberts, an employee of Exane SA, a Paris-based brokerage firm, was among those arrested. Exane's parent is half-owned by BNP Paribas but is controlled by Exane management. Exane specializes in cash equities, equity derivatives and asset management.

"Exane Ltd. confirmed that an employee of the firm has been questioned by the FSA in connection with allegations concerning insider trading," Andrew Melrose, Exane's chief executive officer, said."It would be inappropriate for Exane to comment further at this stage; however, we will provide whatever assistance we can to the authorities during the investigation."

The Journal reports that insider trading appears to be a persistent problem in the UK The FSA said in its 2008-2009 annual report that it had found 29.3% of corporate announcements in 2008 were preceded by abnormal movements in the companies' share prices, up from 28.7% in 2007 and 23.7% in 2005.