Let's not beat about the bush - the leak of confidential information ahead of an important announcement by a company is second-nature to stock markets.
According to some, the practice even predates the invention of the equity market. As one erudite dealer recently put it, the betrayal of Jesus by Judas for a considerable amount of money was the first case of insider dealing ever recorded by history.
The technique has changed little since then. The modern-era insider is someone who knows about a key development at a company, normally an acquisition, and piles into the shares in the hope of making a killing when the news is made public.
In these days of big deals and even bigger advisory teams, the list of potential insiders is immense: corporate financiers, public relations consultants, traders and even employees of the company could all be privy to lucrative, confidential information.
That is why there is little chance of completely wiping out insider trading from the stock market. There is, however, a case in favour of curbing this practice to make sure that a large section of the market - usually the small punters but also most dealers - are not trading at a disadvantage to a better-informed minority.
The root of the problem is that the current system to investigate and prosecute insider trading does not work. At present, the Stock Exchange is charged with investigating suspicious share price movements. When its state-of-the-art computers detect a strange spike or fall in a stock, the Exchange starts scouring the market for the evidence of insider dealing.
The authorities never reveal the object of their attentions, but it is not a secret that they carry out dozens of probes a year. This year, they are understood to have looked at a number of high-profile cases, including the much-leaked bid by NatWest for Legal & General, and, only last week, the rise in the price of cement-maker Rugby ahead of a bid approach.
However, the Exchange has no power to prosecute the suspected insider dealers and can only pass the files on to the Department of Trade and Industry. What the DTI does with the files is a mystery. The governmental investigators did not bring to court any of the 33 cases highlighted by the Stock Exchange in 1998. In fact, the DTI has not prosecuted an alleged insider dealer since 1996.
Admittedly, it is difficult to prove insider dealing, but such a strike rate would make Inspector Clouseau blush, let alone the allegedly hard- nosed financial 007s of the DTI.
Clearly, the Stock Exchange/DTI double act does not work and it is time for a change. The policing and prosecution of insider trading must be handed to a single institution. In a perfect world, the Stock Exchange, the only real interface between the market and the dealing public, should be given enough teeth to mount a credible offensive against this problem. However, if the Exchange is not deemed to be fit to have judicial powers, then the supervision of insider dealing should be given to the all-powerful Financial Services Authority.
If the status quo is allowed to persist, do not be surprised to hear market players whistling the Pink Panther theme tune when they hear of the next investigation into a price movement.
Both outsider and insider dealers will have plenty to chew on next week when a host of blue chips report figures. The results schedule will be dominated by former state-owned firms.
BP Amoco starts proceedings today with its third quarter results. Underlying earnings should come in more than 40 per cent higher at around $1.7bn thanks to the surge in the crude price.
However, the market's attention will be focused on the recent setback in the completion of the merger with US rival Arco. Analysts will want to know whether the debate with the US regulator and the governor of Alaska will delay the deal beyond the original deadline of the end of the year. On the upside, the deal with Amoco should have delivered the promised $2bn a-year cost savings 15 months ahead of schedule. The widely- mooted share buyback will also be on the agenda. Some analysts expect BP to keep the dividend in check in anticipation of a cash back next year.
Today's second-quarter results from British Airways will underline the airline's recent troubles. Pre-exceptional profits should slump from pounds 240m last year to a minor profit or even a loss due to higher fuel costs and increased competition.
According to Richard Hannah, transport analyst at Deutsche Bank, at these levels the dividend is not covered and BA is likely to slash last year's interim payout of 5.2p or warn of a cut in the full-year dividend. The raft of bad news is bound to fuel recent rumours that the embattled chief executive, Bob Ayling, is on the way out.
British Telecom, interims on Thursday, should report a slight rise in profits to around pounds 1.6bn as the cost of winning customers for its Cellnet mobile phone subsidiary takes its toll. Industry experts will quiz the management on their strategic plans, in particular the recently-approved joint venture with US giant AT&T.
Rival Cable & Wireless should fare worse, reporting a dip in interim profits on Wednesday from pounds 788m to around pounds 500m amid tough trading conditions in the Far East.
The gas group BG should post a good rise in third-quarter results on Thursday from pounds 28m to pounds 44m thanks to a fall in the interest charge. News on the much-rumoured restructuring of its international operations and of its Transco pipeline business will be keenly sought
The insurance giant CGU should please investors with its third quarter results on Wednesday. In its recently-published new business figures, the company has already said that sales of policies and pensions rose 30 per cent over the period.
The sales rise should translate into a profit of around pounds 625m, compared with pounds 61m last time round. Analysts will be looking for increases in premium rates - the usual sign that insurance markets are picking up.
THE WEEK AHEAD
COMPANY EXPECTED PBT* LAST PBT
Assoc.Brit.Foods pounds 393m pounds 401m
Carr's Milling pounds 2m -pounds 2m
BP Amoco*** $1.7bn $1.098bn
British Airways** pounds 10m pounds 240m
Unigate pounds 50m pounds 64.5m
Cadcentre pounds 1.5m pounds 1.3m
Colt Telecom*** pounds 105m pounds 61m
First Group pounds 59m pounds 45.3m
Imagination Techn. pounds 1.6m pounds -0.380m
WT Foods pounds 4.3m N/A
Fenner pounds 13m pounds 15m
MMT Computing pounds 10m pounds 10m
McCarthy & Stone pounds 34m pounds 29m
Minorplanet Syst. pounds 0m pounds -2m
Connaught plc pounds 2m pounds 1m
British Energy pounds 50m pounds 46m
Cable & Wireless pounds 500m pounds 788m
CGU*** pounds 615m pounds 435m
European Colour pounds 2.38m pounds 2.07m
COMPANY EXPECTED PBT* LAST PBT
Wardle Storeys pounds 14m pounds 16m
Bank of Ireland E404m E425m
BG*** pounds 775m pounds 722m
BT** pounds 840m pounds 805m
Viridian pounds 42m pounds 40.5m
Old English Inns pounds 3.6m pounds 4.1m
Source: I/B/E/S AFX, Deutsche Bank
* PBT- Profit before tax
** Second quarter results
*** Third quarter results
ECONOMICS NEWS - MONDAY: Producer prices (October), Euroland Economic Sentiment (October), Euroland Unemployment (October). TUESDAY: Chancellor Gordon Brown's Pre-Budget Report, BRC Retail Sales (October). WEDNESDAY: Bank of England quarterly inflation report, US Producer Price Index (October). THURSDAY: None. FRIDAY: US Retail Sales (October), US Non-Farm Productivity (October).