Miraculous Rise and Dramatic Acquittal of U.K.’s ‘Mad Punter’

  • Iraj Parvizi went from kebab shop to stock-market riches
  • Found not guilty of insider trading in Tabernula case

Biggest U.K. Insider Trading Case Wraps Up

Iraj Parvizi made his way through the London courtroom, an untucked white Ralph Lauren shirt covering his pronounced paunch. Dressed in sneakers and jeans, he looked out of place among the spectators in suits and barristers in black robes and wigs.

The 50-year-old Iranian’s eyes darted anxiously from the jurors who would decide his fate to his fellow defendants in the dock to the reporters taking notes at the back of Courtroom 3. It was April 6, three months into the trial of what British authorities described as the country’s biggest insider-trading ring, and Parvizi’s lawyer wanted to help the jury understand his client.

Iraj Parvizi

Photographer: Chris Ratcliffe/Bloomberg

“Just try to be yourself,” the lawyer, Orlando Pownall, reassured him, as Parvizi took the witness stand in Southwark Crown Court. For the first time that morning, the man known in gambling circles as the “Mad Punter” cracked a smile.

Over the next two days, Parvizi told with growing relish the story of his ascent from kebab-shop worker to multimillionaire gambler and trader. It was a rags-to-riches tale so outlandish it would surely be rejected by Hollywood as lacking credibility.

‘Fatty,’ ‘Nobu’

This week his winning run continued.

Parvizi was acquitted Monday, along with two defendants, of taking part in an insider-trading ring that prosecutors claimed bagged more than $10 million over four years. Two other men, a former Deutsche Bank AG managing director and an accountant, were found guilty of the same charge.

The alleged con laid out by the prosecution was simple: A pair of bankers were said to have passed confidential information about companies to a middleman, who then handed it to Parvizi and his business partner to place bets. Jurors were told that the men gave each other nicknames like “Fatty” and “Nobu” and used encrypted memory sticks to record their trades before they were arrested in what was dubbed Operation Tabernula.

The men all denied the charges. Parvizi acknowledged placing the trades but said he didn’t know that they were based on inside information. In the world of day trading and high-stakes gambling, he said, it’s an unspoken rule never to ask the source of a tip. After a four-month trial and nine days of deliberations, the 12 jurors agreed.

Lost Everything

The son of an Iranian diplomat, Parvizi testified that he and his three siblings spent their childhood being dragged from one Middle Eastern country to another. When he was about 11, he was sent to Broadstairs, a fading seaside town in Kent, to live with an aunt and get an elite British education. When the Iranian revolution struck two years later, the family lost everything. Parvizi was pulled out of private school, and his parents were exiled to the U.K., where they struggled to find work. His father spent his days glued to the radio listening for news of the Ayatollah’s demise that never came.

QuickTake Insider Trading

Parvizi got his first taste of markets when his school entered a Financial Times stock-picking competition. His team put its entire imaginary 50,000 pounds ($72,000) into volatile platinum and gold stocks. After the first couple of weeks, he said, they were ranked No. 1 in the country. By the end, they’d fallen to last place.

He dropped out of school before taking his final exams and spent the next few years drifting from dead-end job to dead-end job -- double-glazing salesman, pizza-delivery boy, selling insurance door to door. By his early twenties, he was making doner kebabs in a takeaway in Ramsgate, where the beaches looked nothing like the ones he’d grown up on in Oman and the Persian Gulf.

Parvizi said his father frittered away whatever money the family had at the local casino. That didn’t stop his oldest son from getting the bug.

‘Lucky Gambler’

“I am a lucky gambler,” Parvizi told the jury in an estuary accent still flecked with an Iranian lilt, explaining that he favored games of blind chance such as blackjack and roulette. “When I was 22 or 23, I met a gentleman that changed my life.”

One of Parvizi’s friends was hosting a poker game and had invited an older player from London named George Maxwell-Brown. The group looked forward to fleecing him for all he was worth. Instead, the interloper took everything. As he was counting his winnings and the others were cursing their bad luck, Parvizi, who had lost more than a week’s wages, walked over and shook his hand.

“Thanks for the lesson,” he said.

Impressed with the young man’s attitude, Maxwell-Brown gave Parvizi his business card. When Parvizi plucked up the nerve to call, Maxwell-Brown offered him a job in London. He packed his bags that week.

Nigerian Chiefs

Maxwell-Brown’s company, Parvizi said, provided short-term loans to wealthy foreigners looking to buy assets in the U.K. The cash came from private and commercial investors. Before long, Parvizi was rubbing shoulders with Nigerian chiefs and Saudi princes, and banking 100,000 pounds a year.

When the property market crashed in the early 1990s, the business folded. But Parvizi had gotten to know the capital providers and branched out on his own.

He cut a striking figure, cruising around in a Bentley in his adopted home of Romford, Essex, on the edge of London’s East End. He married a hairdresser and opened Giorgios, a boutique, beauty spa and restaurant whose clientele was made up of footballers and stockbrokers.

“It was fun,” Parvizi said with a grin, his chest puffed out on the witness stand. “You meet a lot of people, especially in Essex. Everyone wants to know who the guvnor is.”

Carpet Shop

Parvizi cast his net wide, investing in diamonds, jewelry, property and cars. He bought a carpet shop for his father -- it was a way to get money out of Iran -- and gave loans to acquaintances turned down by the banks.

He was honing an almost preternatural ability to accumulate money. One reason was that he wasn’t afraid to lose it. He hired managers to take care of his expanding business empire, freeing up time to focus on his real obsession: gambling.

Parvizi played high-stakes poker with business tycoons and professional footballers such as Teddy Sheringham and Nicklas Bendtner at the cordoned-off Red Room at Les Ambassadeurs casino in Mayfair. The casino is where the words “Bond, James Bond” were uttered for the first time, by Sean Connery in the movie version of “Dr. No.”

He also staked huge sums on horse racing, he said, eventually buying his own thoroughbreds including Breeders’ Cup champion Dangerous Midge. Another horse, Mia’s Boy, was at the center of a probe into possible race fixing in 2007 following suspicious betting, and the jockey was banned for 10 days. Parvizi wasn’t accused of wrongdoing. A former trainer described him as the perfect owner: He always paid his bills on time and rarely turned up at the track.

Fly Bet

Parvizi was so obsessed with gambling in all its forms that he earned the nickname the “Mad Punter.” On one occasion, he recounted in court, he bet 5,000 pounds on which wall a fly would land on next. He won.

Jurors who had struggled to stay awake during discussions of contracts-for-difference and margin calls were rapt. It was as if Parvizi were a different species.

“What motivated your gambling?” his lawyer asked.

“The adrenaline,” Parvizi replied. “Whether it’s horse racing, poker -- I just get a very special buzz out of it. My whole life has been a gamble.”

Trading Tips

Parvizi got into the stock market in the mid-1990s. His timing was impeccable. The tech boom was just beginning and, for the first few years, markets were going only one way. He received a constant flow of tips from his network of contacts, he said, and was competing with taxi drivers and nurses who suddenly thought they were Warren Buffett. Parvizi estimated he was worth as much as 70 million pounds by 2000.

“Without giving it large, I think I was very well known,” he testified, describing himself as “the king of the penny shares.”

At some point Parvizi cottoned to the idea that he didn’t have to wait for shares to move to make money: He could make it happen himself. He got to know reporters at the Financial Times and the Daily Mail and began speaking to them frequently. If they brought up a topic, he knew there was a chance it would appear in the next day’s paper and the shares would pop, he said. By then, he was also a big enough investor that buying shares and letting the market know about it could be enough to ramp up the price.

Parvizi and his business partner and fellow defendant, 71-year-old Scotsman Ben Anderson, who was also acquitted, were part of an elite band of wealthy private traders who distinguished themselves by the quality of the tips they received and their ability to influence the market. Spread-betting firms valued their business so highly, Parvizi said, they would tip them off about what other high-volume participants were up to.

‘Gold Dust’

Not all of the tips Parvizi received were “gold dust,” he said. Around 2003, rumors were flying that British office-rental company Regus Plc was a takeover target. According to the gossip, everyone from a Mexican conglomerate to a U.S. investment group was waiting to pounce. Parvizi and Anderson bet big, buying about five million shares. At the same time, Simon Cawkwell, a short-seller known as “Evil Knievil,” began shorting the stock.

A battle developed between Cawkwell, the portly son of an Oxford University don, and the Mad Punter that lasted for months.

“If I lost I would’ve been wiped out," Parvizi said. “I gambled everything I had -- my money, my family’s money, my friends’.”

In the end, Regus undertook a share issue and the stock jumped, leaving Evil Knievil licking his wounds. Parvizi was on vacation in Dubai when he heard the news and concluded that the place must be lucky. He moved there soon after. He bought a timber business and acquired plots of land in an area known as Emirates Hills, where he built luxury mansions worth 20 million pounds.

‘Biggest Casino’

The party came to an abrupt end in the early hours of March 23, 2010, when Parvizi was arrested in the U.K., along with five others. They were accused by the regulator of trying to profit from inside information on six stocks: Scottish & Newcastle Ltd., Sky Plc, Legal & General Group Plc, NCipher Plc, Just Retirement Group Plc and Paragon Group of Cos. Parvizi admitted placing the bets on behalf of the other men but denied he knew they were in receipt of inside information.

On his third day on the stand, Parvizi was cross-examined by Financial Conduct Authority barrister Mark Ellison. The lawyer asked him how he had made money by spreading rumors. The trader gave the example of an occasion when he phoned a journalist he knew and tried to “plant the seed” that a takeover bid for Sky, then known as BSkyB, was in the offing. The idea was that the reporter would notice higher than average trading and assume something was going on, he said.

At the prosecutor’s prompting, the judge turned to Parvizi and warned him he was at risk of admitting the separate criminal offense of attempting to manipulate markets by making deliberately misleading statements.

The stock market was “the biggest casino in the world,” Parvizi said. The only offense as far as he was concerned was trading on nonpublic information, which he denied ever doing.

You had no idea about rules on dealing? Ellison asked.

“You’re making out like I’m the only liar in the stock market,” Parvizi said, looking around the room for support. “If everyone told the truth, the stock market would not move.”

It was a dramatic twist in a trial full of them, but in the end it didn’t matter. Seconds after he heard the verdicts on Monday, the Mad Punter marched out of the courtroom without acknowledging the other defendants. A smile was plastered across his face.

— With assistance by David Scheer

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