Martyn Dodgson, a former Deutsche Bank AG (DB) broker and managing director, and Andrew Hind, an accountant, were convicted of insider trading in London. The Financial Conduct Authority said that that Dodgson and another broker gave insider information about certain business deals to Hind, who then passed on the information to two other traders. They allegedly made $10.7M from trading half a dozen stocks in what is being called the largest insider trading case in the U.K.
The probe into the insider trading allegations, known as Operation Tabernula, has been going on for nine years. Already, three other convictions have been rendered related to the investigation. According to prosecutors, those involved employed conventional techniques and modern technology to conceal their trades. For example, they would meet at Indian restaurants where they’d hand over money in envelopes. They also purportedly used pay-as-you-go phones and encrypted memory sticks.
After investigators planted a bug in the office of day trader Benjamin Anderson, a conversation was recorded involving Iraj Parvizi, another day trader, in which Dodgson was described. Anderson and Parvizi, who were both acquitted of criminal charges, claimed that they had no reason to believe that the tips they were receiving was insider information.
It was in 2014 that former Moore Capital Management LLC trader Julian Rifat pleaded guilty to insider trading in an offshoot probe of this investigation. He admitted to sharing insider information that he received while employed at the firm to associate Graeme Shelley, who then traded to benefit the two of them. Shelley, who was formerly with Novum Securities, also pleaded guilty to insider dealing with Rifat and associate Paul Milsom, who entered his own guilty plea.
In other recent insider trading news, a Silicon Valley executive will pay over half a million dollars to resolve U.S. Securities and Exchange Commission charges. Peter D. Nunan allegedly was contacted by an FSI International board member and told in confidence that Tokyo Electron Ltd., a semiconductor equipment company, was working on a deal to acquire FSI. Hunan went on to facilitate communications between the two companies while FSI looked for a competing bid.
The SEC said that Nunan improperly used the confidential data given to him about FSI’s possible merger plans and bought 105,000 FSI shares. He also purportedly recommended the shares to his brother, who bought 1,000 FSI stock shares. After the merger was announced, Nunan sold the bulk of his FSI stock the day after and made nearly $255K in illicit profits.
Insider trading may involve legal or illegal conduct. In the legal version of insider trading, corporate insiders purchase and sell stock in their own companies, while reporting these trades to the SEC. With illegal insider trading, the sale of a purchase of a security will typically involve a breach of fiduciary duty, confidence, or trust through the use of material, nonpublic information about the traded security. A violation of insider trading may involve making a trade based on knowledge of insider information, providing the insider information to another person, or using someone else’s insider information tip to make a trade.
Please contact our securities law firm if you suspect that your investment losses are a result of fraud.
Ex-Deutsche Bank director guilty in UK insider dealing case, CNBC, May 10, 2016