CSA Partners: Compliance Blog

Swiss trader to pay $2.8m to settle insider trading charges / Martin

17/06/2015. | This post has no Comments

The Securities and Exchange Commission today announced that a Basel based Swiss trader has agreed to pay more than $2.8m to settle charges that he traded on nonpublic information ahead of a Florida-based biometrics company’s acquisition by Apple Inc.

An SEC investigation unearthed evidence that Helmut Anscheringer purchased stock and call options in AuthenTec Inc (which provides fingerprint sensors and software for use in electronic devices) having learnt from a friend related to an AuthenTec executive that Apple proposed to buy the company.

The call options accounted for nearly all of the series volume on the days he purchased them. Just days later, AuthenTec publicly announced that it had agreed to become a wholly-owned subsidiary of Apple for $355m in cash. The positive news led to the stock price closing approximately 60% higher than the previous day. Through his unlawful trading, Anscheringer garnered more than $1.8m in illicit profits.

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Accountant and son charged in $1.1M Insider Trading Scheme / Siim

15/05/2015. | This post has no Comments

The Securities and Exchange Commission charged a CPA and his son in New York on Thursday, accusing them of conducting an insider trading scheme involving tips on nonpublic information that they sent in coded email messages disguised as discussions about golf.

The SEC alleges that Sean R. Stewart, who is currently a managing director at a prominent investment bank, routinely tipped his father Robert K. Stewart with confidential information about future mergers and acquisitions involving clients of two investment banks where he has worked during the past few years.

The elder Stewart, who is a CPA as well as the CFO of a technology company, allegedly cashed in on the tips by placing and directing highly profitable securities trades ahead of at least a half-dozen merger and acquisition announcements.  The scheme generated approximately $1.1 million in illicit proceeds in a four-year period.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against the Stewarts.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Robert Stewart recruited a trading partner to help him hide his illegal trading and the connection to his son as the source of the nonpublic information about investment bank clients.  Trades were conducted in the partner’s account, and the illicit profits were shared in the form small cash payments to Robert Stewart to avoid creating a clear paper trail of the kickbacks.  They also spread trades over numerous stock options series in an attempt to avoid raising red flags with regulators.

“Serial insider traders assume a huge risk that we will detect their pattern of trading and connect them to their source of confidential information,” said Daniel M. Hawke, chief of the SEC Division of Enforcement’s Market Abuse Unit.  “We have integrated new technological tools to quickly and easily identify relationships among traders and spot suspicious trading across multiple securities.”

According to the SEC’s complaint, there were additional ways the elder Stewart and his fellow trader attempted to conceal the scheme and evade detection when sharing nonpublic information obtained from Sean Stewart about investment bank clients.

They primarily met in-person or used coded e-mail messages to discuss the scheme and trading plans.  Among examples of e-mail text using golf terminology were “saw local story about high cost of golf reservations since a foreign company purchased all- even more expensive than imagined” and “might have an opportunity to play golf- but would need to book the reservation as soon as the office opens Tuesday morning.”

The SEC’s complaint charges Robert and Sean Stewart with violations of the antifraud provisions of the federal securities laws.

Robert Stewart was arrested on conspiracy and insider trading charges this morning at his home in North Merrick, Long Island. Sean Stewart surrendered to the FBI on the same charges in Middleton, Wis., and is expected to appear in Manhattan federal court on Monday.

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FCA fines Kenneth Carver 35,000 GBP for part in Logica insider trading scheme / Mait

31/03/2015. | This post has no Comments

Former accountant Ken­neth Carver was yesterday fined £35,212 by the Finan­cial Conduct Authority (FCA) for his part in the Logica insider trading scheme.

Carver is a family friend of recently imprisoned Ryan Willmott who pleaded guilty to three counts of insider trading during his time as a financial planning and group reporting manager for IT management firm Logica.

Willmott dealt on information he obtained regarding the takeover of Logica by CGI Group in May 2012 and has been jailed for 10 months. Carver bought 62,000 shares in Logica during the scheme and made a profit of £24,206.70 from selling the shares after they saw a 59.8 per cent rise from the takeover announcement.

FCA acting director of enforcement and market oversight Georgina Philip­pou said: “Carver… used his own funds to place a trade on Willmott’s behalf and knew that Willmott had a financial incentive to persuade him to trade. Market abuse is a ser­ious offence and today’s fine reflects the fact that we will not hesitate in taking action against individuals who act on inside information.”

However, since Carver co-oper­ated with the FCA and settled at an early stage of the probe, his fine was reduced from the £122,212 it would otherwise have been.

Source: City A.M.

Regulator fines Aviva Investors £18m for control failures / Mait

24/02/2015. | This post has no Comments

The Financial Conduct Authority has hit Aviva Investors with its second largest fine on record for a UK asset manager after finding the group’s traders manipulated deals to boost their fees at the expense of customers.

The watchdog on Tuesday issued the fund management arm of Aviva, the FTSE 100 insurance and investment group, with an £18m penalty for failing to prevent an “abusive practice” known as cherry-picking for as long as eight years.

The punishment comes as the UK’s £5tn asset management industry attracts increasing scrutiny from regulators. Just last week, the FCA warned the sector was not doing enough to guard against potential insider trading and market abuse.

It forms part of a campaign by the authority to ensure financial services professionals put the interests of their clients first. In issuing the penalty on Aviva, the FCA said that ensuring asset managers manage potential conflicts of interest effectively would “continue to be an area of focus” for the regulator.

The watchdog said the failings arose as the same trading desks at Aviva Investors, which manages almost £240bn worth of assets, handled multiple funds that charged varying levels of fees.

Traders were presiding over assets for external hedge funds — which Aviva charged fees of up to 20 per cent — as well as the company’s own life insurance policyholders, according to people familiar with the matter.

Instead of booking bond trades immediately to a particular fund, they would wait to see how the positions performed — and then allocate them to the funds depending on their performance fees.

For instance, the FCA said, a trader could buy a security in the morning intending to allocate it to a hedge fund, but six hours later, after seeing it fall in value, allocate it instead to another fund that charged low or no fees.

The practices would allow the traders involved to benefit financially, as they would receive a cut of the charges.

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Implementing Measures under the Market Abuse Regulation – Publication of Responses / Martin

29/01/2014. | This post has no Comments

ESMA has today published responses to its Discussion Paper on possible implementing measures under the Market Abuse Regulation.

Stakeholders where invited to comment by 27.01.2014 ESMA’s orientations on possible implementing measures that will be of fundamental importance for the new Market Abuse framework (see earlier post).

In total 44 responses were provided by wide variety of stakeholders and associations. Contributions from compliance industry and professionals were provided by CSA Partners and Working Group of Hungarian Compliance Professionals.

ESMA will consider the feedback to the consultation within Q1 2014. ESMA will prepare consultation papers upon input of both its draft technical standards and technical advice to the Commission.

ESMA expects to further publicly consult on the draft technical advice on delegated acts in spring 2014 before submitting it to the Commission within the requested deadline.

In addition, ESMA will conduct an open public consultation before submitting its technical standards to the Commission. The date of publication of such consultation and commenting period will depend on the date of publication of the level 1 text (Market Abuse Regulation and Directive on Criminal Sanctions for Market Abuse) on the OJ.

Deadline for ESMA’s Discussion Paper on Possible Implementing Measures Under the Market Abuse Regulation / Martin

27/01/2014. Tags: , , , , , | This post has no Comments

Today was the closing date for comments to the the European Securities and Markets Authority’s (ESMA) Discussion Paper (dated 14.11.2013) on Possible Implementing Measures Under the Market Abuse Regulation. Topics of the Discussion Paper included among others the following key elements of the Market Abuse regime that is pending for renewal under the Market Abuse Regulation:

> Buyback programmes and stabilisation
> Specification of the indicators of market manipulation
> Public disclosure of inside information and delays
> Insider list
> Managers’ transactions

By using valuable views from our customers we were able to contribute to the consultation on various items considered by ESMA on insider lists and related topics of compliance management.

Download: MarketAbuseRegulations_ESMA_comments_CSA_27.01.2014 (PDF).

All contributions received by ESMA will be published shortly.

Four Charged for in U.K. FSA Insider-Trading Probe / Martin

02/12/2012. | This post has no Comments

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.

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