CSA Partners: Compliance Blog

The Money Times wrote about another inside information case, but rather different this time.

A Walt Disney Co. administrative assistant and her boyfriend were caught trying to sell inside information regarding the company’s earnings. Both of them were arrested Wednesday morning in Los Angeles.

Walt Disney Co.’s head of corporate communications, Zenia Mucha’s assistant Bonnie Hoxie and her boyfriend Yonni Sebbag plotted to sell confidential Disney information to investment companies. The duo sent out mails to about 33 companies, including hedge funds, offering to share Disney’s quarterly earnings report with them in exchange of money.

Releasing Disney’s confidential information

“Hi, I have access to Disney’s (DIS) quarterly earnings report before its release on 05/03/10,” read the letter, sent Mar 5. “I am willing to share this information for a fee that we can determine later.”

The United States attorney for the Southern District of New York has charged the two with conspiracy and wire fraud. Hoxie, 33, and Sebbag, 29, could face up to 25 years in prison and a $250,000 fine, if convicted on all charges.

A federal judge released Hoxie on a $50,000 bond but ordered that Sebbag must be held as a potential flight risk. The U.S. Securities and Exchange Commission has also sued the two.

Read the whole story >

MSNBC wrote: A former top executive at a $1 billion hedge fund investment firm was sentenced to more than two years in prison Friday in the first sentencing to result from what prosecutors have called the largest hedge fund insider trading case in history.

Mark Kurland, 61, of Mount Kisco, N.Y., was sentenced Friday to two years and three months in prison and ordered to forfeit the $900,000 he made through illegal trades by a judge who blamed the attitudes of people like Kurland on the country’s financial collapse two years ago.

U.S. District Judge Victor Marrero said Kurland, a co-founder of New Castle Partners hedge fund in Manhattan, “frankly should have known better” than to join an inside trading scheme that led to the arrests of top executives including one-time billionaire Raj Rajaratnam.

“He had a choice as a leader of the financial industry. He could have led by example. Instead, he chose to follow. He became a joiner, surrendering to the spree of the financial market’s virtual mob mentality that nearly brought down this country’s financial industry in the quest for ever bigger and faster gains,” Marrero said.

Kurland, who had pleaded guilty to conspiracy to commit securities fraud and securities fraud, was among 11 people who have pleaded guilty in the case. Many of the others had agreed to cooperate with the government, a step which delays their sentencing.

Rajaratnam, the portfolio manager for the Galleon Group hedge fund, has pleaded not guilty and disputed government claims that he pocketed as much as $50 million through a network of cheating executives at financial firms and companies privy to inside information.

The judge criticized pleas for leniency on Kurland’s behalf on the grounds that he had a minimal role, that he did not benefit much financially, that others were more at fault and that there was no real harm to the markets.

Read the whole story >

Times Online writes that The Serious Organised Crime Agency raids on some of banking’s big names have sent shock waves through the City of London.

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The men are suspected of being part of what the watchdog has described as a “sophisticated and long-running insider dealing ring”. The FSA believes the ring made “significant profits” by trading on secret information.

This was the fifth set of arrests since it launched a crackdown two years ago, though this is markedly different from the others. Previous efforts have homed in on fringe players — interns at investment banks, retired stockbrokers, silver surfers with online trading accounts, and occasional rogues at second-tier firms.

Last week’s arrests struck at the heart of the City. Dodgson, 38, is known by the bosses of almost all Britain’s big banks and insurers. He has been a trusted adviser on deals for the likes of HBOS and Legal & General. He even played a bit-part in advising the Treasury on the banking bailout. His CV reads like a roll-call of the City’s biggest investment banks: Cazenove, UBS, Morgan Stanley, Lehman Brothers and Deutsche.

The same is true of the other suspects. Clive Roberts, who was also questioned on Tuesday morning, is head of equities at Exane BNP Paribas. His clients include some of London’s biggest traders, such as Roger Guy, star fund manager at Gartmore.

Julian Rifat, 41, whose Oxfordshire home was raided at 4.45am on Tuesday, is a trader with Moore Capital. Every device in his home that could store information was removed by investigators — including his children’s iPods.

Other suspects include well-known brokers and traders in the AIM market, regularly spotted out and about in City wine bars.

If the FSA can prove its case, it will shake the City to its core.

“I’m absolutely disgusted,” said one senior City banker. “The idea that someone in our line of work could do anything with inside information appals me. We get inside information all the time — it’s part of the job. You assume that everyone respects that. It’s what we do. You simply could not function if you were to spend all your time thinking that members of your team may be trading on that information.”

In the City’s biggest banks, it is assumed that insider dealing is something that happens somewhere else. There are armies of compliance staff monitoring every trade.

Read the whole story >>

Malcolm Calvert, a former equities marketmaker at stock broker Cazenove, was found guilty at Southwark Crown Court on five counts of insider dealing according to UK FSA. Calvert made approximately £103,883 profit from the trades that took place between June 2003 and October 2004.

The case is the third successful prosecution for insider dealing bought by the Financial Services Authority (FSA) and is part of its ongoing drive to tackle market abuse and promote efficient, orderly and fair markets.

The prosecution is also notable for the involvement of a key witness, Bertie Hatcher – a friend of Calvert – who agreed to provide evidence in the trial having been involved in the illicit dealings himself.

Margaret Cole, director of enforcement and financial crime at the FSA, said:

“This is another milestone in our fight against market abuse. It’s a misconception that insider dealing is a victimless crime: it damages the very confidence and trust our markets operate on and it must be stopped.”

“The guilty verdict is a shot across the bow for any city workers who may be tempted to trade using insider knowledge. Our message is simple: if you take part in such activity, you run a very real risk of the FSA taking criminal action against you.”

The full sentencing and confiscation hearing will took place on Thursday 11th March.

The FSA also announced that it has fined Hatcher, a retired bookmaker and insurance broker from Ipswich, £56,098 for market abuse, and published details of the agreement it made with him which led to his assistance in the prosecution of Calvert.

The FSA found that between 2003 and 2005 Hatcher had profited from inside information, using it to buy and sell about 420,000 shares in six companies. The fine represents the full disgorgement of his share of the net profit from these trades.

As part of a settlement with the FSA, Hatcher agreed to provide ongoing assistance to the investigation. In return, the FSA agreed to sanction Hatcher using its regulatory powers rather than a criminal prosecution; Hatcher’s fine was also reduced substantially owing to his cooperation.

Ms Cole continued:

“Hatcher took part in illicit trades using inside information and profited from them; because of this he has received a significant fine. However we were also mindful of the need to encourage others to come forward and assist in the investigation and prosecution of insider dealing and market abuse – especially where it is suspected that two or more people have been involved – and that is why we made an agreement with him.

“Hatcher provided valuable evidence to the FSA, not just about his own misconduct, but also in relation to Calvert. We will continue to enter into agreements of this sort where we believe it is in the public interest and interests of justice for the FSA to do so.”

Source: FSA UK Homepage

Several leading Estonian financial sector services and software solutions are now displayed on five touch-screens in the Estonian IT Democenter, located in Ülemiste City technology park, Tallinn.

The exposition, initiated by NASDAQ OMX Tallinn involves eCSD Expert, Estonian CSD, Mindware, Proekspert, CSA Partners and the Centre of Registers and Information System as partners.

Andrus Alber, CEO of NASDAQOMX Tallinn Stock Exchange opening the demo

Additionally the NASDAQ OMX Baltic securities market real-time trading statistics can be seen at the Democenter.

You are welcome to visit the Democenter. In case you would like to schedule a visit, please contact us.

• See more pictures form the opening event

The Guardian wrote that two City workers face fines and a ban from the Square Mile after they used inside information to make more than £85,000 from spread betting on shares.

Robin Chhabra, a former research analyst at Evolution, and his friend Sameer Patel, an investment manager at General Motors Asset Management, were found by a City tribunal to have colluded in using confidential information to make quick profits.

Their punishment is yet to be decided because they had been disputing a finding by the Financial Services Authority that they had committed market abuse. However, the financial services and markets tribunal, which rules on disputes between the FSA and individuals and firms facing regulatory action, upheld the FSA’s case.

Margaret Cole, FSA director of enforcement and financial crime, said: “Chhabra and Patel’s behaviour fell far short of that expected of approved persons. By repeatedly giving Patel privileged information, Chhabra breached the trust of his clients and his employer.

“Patel exploited this information to try to make a quick profit at the expense of other investors. Market abuse is a serious matter and the FSA will continue to pursue and take action against anyone who believes they can make easy money off the back of confidential information.”

The tribunal will hold a new hearing on the “penalties and prohibition orders” against the two men, both aged 38. They have known each other for more than 20 years, acting as each other’s best man, and between 20 April and 3 August 2004 had 165 “telephone contacts”.

Patel, who was using his own money to trade, made £85,541 after placing spread bets on ebookers and Eidos shares following tips from Chhabra, who received inside information at Evolution where he covered 20 stocks.

Some of the gains were made when the companies issued profits warnings during the middle of the trading day – an unusual occurrence, rather than 7am – the tribunal was told by the FSA.

Read the whole story >>

BalticBusinessNews writes that Swedbank employee suspected of insider trading. Anton Uustalu, 27-year-old former employee of client relations department of Swedbank, is one of the suspects in insider trading scheme with Eesti Telekom stock.

Priit Perens, general manager of Swedbank Eesti, said that he could not comment the case and suggested that Äripäev asked the prosecution for comment. “Uustalu left on the mutual agreement,” was all that Perens said, without elaborating why Uustalu’s employment contract was terminated.