Archive for the ‘UK’ Category

The Telegraph writes that two more individuals connected to US hedge fund Greenlight Capital have been fined over a multi-million pound insider-dealing case.

Christian Littlewood, a senior investment banker and former Financial Services Authority (FSA) Approved Person, his wife Angie Littlewood (also known as Siew Yoon Lew and Angie Lew) and a family friend Helmy Omar Sa’aid have pleaded guilty to 8 counts of insider dealing contrary to section 52 of the Criminal Justice Act 1993. They are alleged to have made approximately £590,000 profit from the trades.

The offences relate to trading in a number of different London Stock Exchange and AIM listed shares between 2000 and 2008 and were only brought to an end when the City of London Police working with FSA staff arrested the Littlewoods in March 2009.

The third defendant Helmy Omar Sa’aid was returned to the UK in March 2010 following the execution of a European Arrest Warrant in Mayotte, one of the Comoros Islands.

The case was bought by the FSA and heard at Southwark Crown Court. It is the sixth successful prosecution for insider dealing bought by the FSA and is part of its ongoing drive to tackle market abuse and promote efficient, orderly and fair markets.

Margaret Cole, managing director of enforcement and financial crime, said:

“It seems that the penny is beginning to drop. These guilty pleas show that our strategy of a tough approach to insider dealing – and, in particular, demonstrating that we are prepared to fight difficult criminal prosecutions to trial – is paying off. Dedicated hard work, bold and innovative use of the tools at our disposal and close seamless co-operation between our markets, enforcement and intelligence functions underpin our successful track record in this complex area.”

The full sentencing and confiscation hearing will take place in the week commencing 31 January.

http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/002.shtml

FSA/PN/002/2011
10 January 2011

The UKA FSA has published the September 2010 edition (Issue No. 37) of its Market Watch newsletter. The newsletter deals with leaks of inside information.

During the past two years, the FSA conducted various intensive enquiries into disclosures of inside information to the media prior to certain announcements.

The aim of these enquiries was to identify suspicious contact between insiders to a corporate transaction and the media and included discussions with regulated firms as to their policies governing such contacts. In addition, the FSA continued its thematic work assessing regulated firms’ systems and controls on handling leaks.

The newsletter introduces the background and sets out the main findings on both work streams. It also contains a list of best practice recommendations in connection with contact with the media where the FSA believes improvement is necessary.

The FSA will continue to monitor for leaks of inside information. If no improvement is noticed in the level of leakage within the markets, the FSA is prepared to consider rule changes. However, it will also take action where it considers that unacceptable practices have occurred or existing systems and controls requirements applying to regulated firms and issuers have been breached.

Market Watch is available:

http://www.fsa.gov.uk/pubs/newsletters/mw_newsletter37.pdf

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.

/…/

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

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 >>

IFA Online wrote about Alexei Krilov-Harrison released inside information of a major contract between Provexis and an international food company to his clients two days before the formal announcement, when the company’s share price was forecast to rise as a result.

On 28 March 2007, Krilov-Harrison made three calls to clients disclosing the upcoming Provexis deal, advising the share price would ‘jump up substantially’ when made public and encouraging them to buy Provexis shares.

Two days later, Provexis announced the new contract and its share price increased by 19.81% from the closing price on the previous day. The FSA found Krilov-Harrison’s actions had been deliberate and been motivated by his desire to get a bonus.

Margaret Cole, director of enforcement and financial crime at the FSA, says: “Anyone who uses inside information to encourage their clients to buy shares is abusing their privileged position and cheating other honest investors. This is plainly wrong. Market participants must ensure they do not pass inside information to their clients in these circumstances.

“We are committed to tackling market abuse in its various guises and will not hesitate to take action to ensure that the UK markets operate in a fair, efficient and orderly way for all investors.”