City regulator The Financial Services Authority launched an insider dealing investigation last month after noticing an increase in trades in Railtrack shares in the grey market just before the government's announcement that it would compensate investors to the tune of 250p a share.
It has now been alleged that Citigroup purchased 500,000 Railtrack shares through a Dutch broker just prior to the public announcement, producing an almost instant profit for the firm of up to £940,000.
Citgroup has now launched its own inquiry and a SSSB spokesman said: 'We take any suggestion of insider dealing very seriously and will be conducting an internal investigation. We have robust Chinese walls and procedures in place that are designed to prevent insider trading.'
The Times reports that US financial services firm Citigroup, whose investment banking subsidiary Schroder Salomon Smith Barney (SSSB) advises the Government on Railtrack, has been dragged into an insider-dealing scandal connected to Railtrack shares.
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