The Financial Services Authority charged a fifth person in a U.K. insider-dealing case involving the front-running of block trades.
Richard Baldwin, 46, was charged by the financial regulator this week, Mark Ellison, a lawyer for the FSA, said at a court hearing in London today. He faced three charges relating to insider dealing and acquiring money “being the proceeds of crime,” according to the indictment.
“The allegations are denied,” Colin Nott, Baldwin’s lawyer a solicitor at Hallinan, Blackburn, Gittings & Nott in London, said in a telephone interview.
The charges stem from an investigation into the front- running of block trades, known as Operation Tabernula, Latin for little tavern. The FSA arrested seven people and raided 16 addresses in London and southeast England in March 2010 as part of the crackdown. Two more arrests came later.
Former Deutsche Bank AG (DBK) Managing Director Martyn Dodgson was among four people charged with insider trading by U.K. authorities in the case in October after an investigation spanning two-and-a-half years.
Dodgson, who was employed by Deutsche Bank at the time of his arrest in March 2010, as well as Andrew Hind, Benjamin Anderson and Iraj Parvizi were charged with “conspiracy to insider deal” between Nov. 1, 2006, and March 23, 2010, the FSA said in October. The agency alleges the men made more than 3 million pounds ($4.9 million) on improper trades.
Tabernula, conducted along with the U.K. Serious Organised Crime Agency, is the “largest and most complex insider dealing investigation to date,” the regulator has said. Those arrested in 2010 include Julian Rifat of Moore Capital Management LLC, Clive Roberts, the head of European sales trading at Exane BNP Paribas and Novum Securities Ltd.’s Graeme Shelley. Rifat, Roberts and Shelley haven’t been charged.
The FSA said at the time of the first arrests in the case that it believed “city professionals passed inside information to traders -- either directly or via middlemen -- who traded on this information and have made significant profits.”
The regulator conducted more searches in April 2011. A ninth suspect, Paul Milsom, then a trader at Legal & General Group Plc’s investment-management arm, was arrested by the FSA in February.
Front-running is a practice in which a trader takes a position to capitalize on advance knowledge of a transaction large enough to influence the price of securities. Bankers often alert select money managers to planned sales of securities before companies publicly disclose them. The guidance they get from fund managers helps underwriters measure demand for the securities so they can price them properly.
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