Posts Tagged ‘Cazenove’

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.

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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

Eight arrests have been made in connection with a major investigation into insider dealing rings by the UK FSA. Workers at Swiss bank UBS and JP Morgan Cazenove, one of the oldest names in the City, were arrested for alleged insider dealing yesterday according to the sources of the Financial Times.

Arrests were carried out in cooperation with City Police who become involved because the FSA has no powers of arrest. City of London police and 40 FSA officials raided premises throughout London and the South East in what the regulator described as “a major ongoing investigation into insider dealing rings”.

The FSA suspects that the alleged ring traded on price sensitive information contained in deal announcements produced at one or both of the banks’ printing plants but which had yet to be made public.

This is the third high-profile action the FSA has taken in the past week over insider trading, in a sign of a tougher approach to a problem the regulator believes is rife in the City and a threat to the integrity of the markets.

Last week, a former partner at the investment bank Cazenove pleaded not guilty to a series of charges brought by the FSA. In only the second criminal case brought by the FSA, Malcolm Calvert was accused of acquiring shares, with inside information, in several companies earmarked for management buyouts, takeovers or mergers. Mr Calvert was remanded on bail, with the case adjourned until September 11.

The FSA launched its first criminal prosecution for insider dealing in January, it has ramped up its focus on market abuse in recent months, after an unprecedented slump in the shares of mortgage bank HBOS.

The FSA’s high-profile crackdown sends a serious warning to the City, where criminal prosecutions are seen as a new threat. The offence carries a maximum sentence of seven years in prison.

The FSA has more than doubled the size of its team of lawyers and investigators with criminal expertise and has announced plans to make more use of jail sentences, along with civil fines.