Biggest Insider-Trading Case in U.K. Started With 'Stag Party'

Four Finance Professionals Charged With Insider Trading

Martyn Dodgson, a former managing director at Deutsche Bank AG, arrives at Southwark Crown Court in London, on Jan. 14, 2016.

Photographer: Chris Ratcliffe/Bloomberg
  • Dodgson denies giving secret tips on first day of testimony
  • Five men on trial for insider trading in `Tabernula' case

Martyn Dodgson, a former managing director at Deutsche Bank AG, told a London court Monday about his friendship with an accountant that started out with a chance meeting at a bachelor party and resulted in both being defendants in the country’s largest insider-trading trial.

QuickTake Insider Trading

Dodgson, 44, denied giving confidential information to the accountant, Andrew Hind, on his first day of testimony in the trial, which started last month. Prosecutors from the Financial Conduct Authority said the pair are among five men who conspired to trade on secret tips through a fund run by Hind on their behalf.

The FCA alleges Dodgson, Andrew "Grant" Harrison, a former stockbroker at Panmure Gordon & Co., Benjamin Anderson, a 71-year-old private day trader, former Aria Capital Ltd. director Iraj Parvizi, and Hind, 55, worked together to trade securities with inside information between November 2006 and March 2010. The FCA claims Dodgson and Harrison passed price-sensitive information from their jobs in the corporate broking departments of big firms to Hind, who then passed it to Anderson and Parvizi to trade on.

Dodgson testified that the investment club had a "hands-off" discretionary fund manager arrangement in which Hind made the buying and selling decisions, he said. Dodgson said he was never involved in the selection of stocks and only gave "parameters" for the risk that should be taken.

No Recollection

Dodgson first met Hind at his brother’s bachelor party in July 2001. While Dodgson said he had “no recollection of the stag party,” he and Hind became good friends.

"He was extremely impressive," Dodgson said in court. "At that time there were not many people that I spoke to who had such an insight into business and the markets more generally."

The investigation, which has been dubbed Operation Tabernula, centers on trading in six stocks, including Sky Plc and Legal & General Group Plc, from which the FCA alleges the men made 7.4 million pounds ($10.3 million) in profits.

"It was always possible for Mr. Hind to take whatever risk decisions he wished," Dodgson said. "My risk appetite relative to Mr. Hind’s was higher through the financial crisis."

Informal, Sporadic

Dodgson never told any of his employers about his arrangement with Hind because it was too "informal and sporadic" to make it an issue, he said. "It must be taken into account that this is extraordinarily common in the equities market. It’s not unusual."

Prior to joining Lehman Brothers as a corporate broker in 2007 Dodgson had temporarily left investment banking to focus on another business and was making plans to go into academia at some point, he said Monday.

"At that time I was concerned that there was a chance that I would not be employed in investment banking for the rest of my career," Dodgson said. "Investment banking is a reasonably draining as an occupation. I had an ambition to return to academics."

Dodgson has a criminal conviction for drunk driving from October 2007. He was fined 500 pounds and banned from driving for five months, he said Monday.

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