The Financial Services Authority (FSA) is conducting an investigation into insider dealing that will force lawyers to abide by the Market Abuse Directive 2005.
The City watchdog is scrutinising four major corporate deals after it estimated that insider dealing takes place on between a quarter and a third of all public transactions.
As part of the project, which is due to report its findings next month, the FSA picked three deals in which it suspected that insider dealing occurred and one in which it did not.
An FSA spokesperson said that in addition to the actual companies at the centre of the transactions, the regulator has spoken to all the advisers, including lawyers, accountants and investment banks.
Publicly listed companies and investment banks are regulated by the FSA and can be sanctioned, but other parties involved in the study are not. It is expected that the FSA will tell the companies it regulates that the onus lies with them to ensure their advisers comply with the directive.
A lawyer involved in the study said: “If a public company insisted on these things then lawyers would just have to do it or else risk losing their client.”