Former TFS Derivatives Broker Banned, Fined by U.K. for Paying Kickbacks
A former TFS Derivatives Ltd. broker was banned from working in the U.K. finance industry for paying kickbacks to a former trader at hedge fund AKO Capital LLP who pleaded guilty in June to insider-trading charges.
In addition to the ban, Fabio Massimo De Biase, the broker, was also fined 252,239 pounds ($400,750) by the U.K. Financial Services Authority for paying 131,000 pounds to Anjam Ahmad at AKO in exchange for brokerage business between January 2008 and September 2009, the regulator said today in a statement. The men overcharged the hedge fund by $739,000 on commissions to increase the amount of money they split, the FSA said.
“De Biase exploited the trust of his employer and his client,” FSA head of enforcement Margaret Cole said. “This substantial fine and the ban from working in the financial services industry are significant penalties and should serve as a reminder that such behavior is woefully short of that expected of approved persons and will not be tolerated.”
The FSA’s enforcement unit has increased prosecutions in the past two years and adopted a policy of “credible deterrence” to prevent market abuse. It has more than doubled the amount of fines levied this year versus last year. Ahmad became the first person to plead guilty to insider-trading charges in the U.K. when he cooperated with the regulator.
Mark Duffell, a spokesman for De Biase’s lawyers at Irwin Mitchell, wasn’t immediately available to comment. De Biase received a reduction to his fine for agreeing to settle the case.
Ahmad was fined 287,000 pounds in June, 131,000 pounds of which was for pushing trades to De Biase. In the insider dealing case, Ahmad admitted to passing information on AKO’s block trades to a co-conspirator who placed spread bets before the hedge fund’s trades. AKO Capital, where Ahmad worked until September 2009, hasn’t been accused of wrongdoing.
Ahmad had said he committed insider trading relating to as many as 22 different companies in 2009. For his cooperation, he received a suspended sentence so he will serve no jail time, and must complete 300 hours of community service.
De Biase, 39, who lives in the Fulham neighborhood of London, was ordered to pay back 198,000 pounds he profited from the scheme, and a 54,239-pound fine, reduced from 500,000 pounds because of “serious financial hardship” and cooperation, according to the regulator.
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