Investment banks face pressure to restrict staff access to live transactions as regulators probe suspicious trading patterns

Several of the world’s largest corporations have instructed their investment banks to review and potentially reduce the number of employees informed about live takeover transactions, according to multiple bankers speaking to the Financial Times. The move comes amid growing unease from regulators over a spike in market leaks and suspicious trading activity in the days and weeks leading up to major acquisition announcements.

Bankers say the shift marks one of the most significant changes to internal deal protocols in more than a decade. Traditionally, investment banks have relied on small, vetted “deal teams” to manage sensitive merger and acquisition (M&A) processes. However, as transactions have become larger and more complex—often involving multiple jurisdictions, financing structures, and advisory groups—the number of insiders with direct knowledge has steadily increased.

Regulators on both sides of the Atlantic have grown alarmed by what they describe as “an unacceptable level” of information leaks. In recent months, watchdogs including the UK’s Financial Conduct Authority (FCA) and the U.S. Securities and Exchange Commission (SEC) have launched investigations into unusual price movements and trading volumes in companies ahead of public takeover announcements.

“The regulators are sharpening their focus, and so are clients,” said one senior M&A banker at a Wall Street firm. “The days of broad internal distribution of sensitive information are coming to an end. If you’re not essential to the execution, you won’t be in the loop.”

Under the new push, corporations are asking banks to map out exactly who is informed at each stage of a live transaction, with a view to trimming the list to only those with an indispensable role. This could mean tighter restrictions on junior staff, support teams, and in some cases, even senior executives who are not directly involved in negotiations.

The concern is not only about regulatory fines but also reputational damage. A leak can scupper a deal or weaken a company’s negotiating position, especially in contested takeovers. “One poorly timed leak can cost hundreds of millions in value,” noted a European corporate lawyer advising on several ongoing M&A transactions.

Some banks are also considering the use of advanced monitoring tools to track access to deal documents and flag unusual patterns in internal communications. Others are reintroducing “clean team” structures, a practice more common in antitrust-sensitive deals, where only a small, quarantined group of employees can handle the most sensitive information.

While the trend towards tighter controls is gaining momentum, it also raises questions about whether smaller deal teams can handle the workload without slowing the pace of execution. M&A transactions are often time-critical, and any delays in due diligence, financing, or regulatory filings can put the entire deal at risk.

For regulators, the clampdown is a welcome sign that companies and banks are taking their concerns seriously. “Market integrity depends on information being properly safeguarded,” said an FCA spokesperson. “We will continue to investigate suspicious activity and hold those responsible for leaks to account.”

As markets brace for a continued surge in takeover activity—fueled by private equity cash reserves and a wave of corporate restructuring—investment banks are now walking a tightrope: balancing the need for operational efficiency with the growing imperative for absolute confidentiality.