The Financial Services Authority (FSA) has admitted defeat following an investigation into so-called 'short selling' of shares in HBOS.
Stock in the company fell a dramatic 17 per cent on Match 19th this year – opening at 491.00p, before falling as low as 398.00p, and closing at 446.25p.
This volatility prompted the FSA to launch an investigation into potential abuse of trading regulations.
However, this investigation has now been dropped, according to a report in the Sunday Telegraph.
The regulator concluded no action can satisfactorily be brought against any individuals - despite a wide-ranging probe, examining thousands of emails and telephone records, the newspaper reports.
The source for the information is thought to be a draft copy of the FSA's findings.
FSA investigators had hoped to find evidence of criminal activity by market insiders, having previously stated it would not tolerate "spreading false rumours and dealing on the back of them".
However, it is reported the FSA still considers elements of the system to be subject to abuse, and is prepared to launch further investigations in the future.
At 09:53 shares in HBOS were down 3.28 per cent, trading at 273.00 pence per share.
This is presently below the 275 pence a share HOBS is expected to offer to existing shareholders as part of a £4 billion rights issue.
Digg 
Delicious 
Reddit 
StumbleUpon 
Google 
Technorati 
Netvouz