Four Charged for in U.K. FSA Insider-Trading Probe
Former Deutsche Bank AG (DBK) managing director Martyn Dodgson was among four people charged with insider trading by U.K. authorities 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 Financial Services Authority said today in an e-mailed statement. The agency alleges the men made more than 3 million pounds ($4.8 million) on improper trades.
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.
The men were all released on bail and must appear at Westminster Magistrates Court on Oct. 19.
Tabernula, conducted along with the U.K. Serious Organised Crime Agency, is the “largest and most complex insider dealing investigation to date,” the regulator said in the statement. The authority has been cracking down on market abuse and insider trading ahead of being disbanded next year and having its enforcement duties taken over by the Financial Conduct Authority.
Deutsche Bank “cooperated fully with the authorities,” the lender said in an e-mailed statement. “The investigation concerned one individual, Martyn Dodgson, and not the bank itself.”
Those arrested in 2010 include Dodgson, 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. The agency said today that, “a number of individuals remain under investigation.”
Parvizi “emphatically denies the charges and is determined to clear his name,” Peter Hughman, Parvizi’s lawyer, said in a telephone interview today.
Michael Potts at Byrne and Partners, the lawyer for Anderson, declined to comment. Hind’s lawyer, Miles Herman at Lewis Nedas Law, couldn’t immediately be reached for comment. Tim Harris, a lawyer at Bark & Co. in London who represents Dodgson, didn’t immediately respond to a voice mail seeking comment on the charges.
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 and arrested a man in the case. A ninth suspect, Paul Milsom, then a trader at Legal & General Group Plc (LGEN)’s investment-management arm, was arrested by the FSA in February.
In July, the FSA won convictions against six men in the largest insider-trading prosecution to date. The defendants profited from trading on inside information taken from the print rooms for UBS AG and JPMorgan Chase & Co. In another recent FSA case, former Dresdner Kleinwort banker Christian Littlewood and his wife were ordered to pay 1.6 million pounds after being convicted of insider trading.
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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