In a parallel investigation by the Financial Services Authority (FSA), the Securities and Exchange Commission (SEC), Department of Justice (DoJ), and with assistance from the Federal Bureau of Investigation (FBI), a former Deloitte Tax LLP partner and his wife were yesterday charged by the SEC with insider trading in violation of the U.S. federal securities laws.
Arnold McClellan and his wife Annabel, of San Francisco, California were charged by the SEC with repeatedly leaking confidential merger and acquisition information to family members overseas in a multi-million dollar insider trading scheme.
The parallel investigation is directly related to the announcement on the 25 November 2010 where five individuals, including two former directors and one former senior trader of Blue Index Limited, a specialist Contract for Difference brokerage, were charged by the FSA with 17 counts of insider dealing, contrary to section 52 of the Criminal Justice Act 1993.
Margaret Cole, the FSA’s managing director of enforcement and financial crime said:
“Whilst we cannot comment on the facts of this case, the insider dealing charges last week were the result of a coordinated effort and investigation between the FSA and the SEC. The action on both sides of the Atlantic demonstrates the way in which close co-operation between regulators is tightening the net on people who set out to abuse markets, wherever those people or markets are based.”
Background
- Journalists are reminded that publication of material concerning a pending or current criminal prosecution is governed by the Contempt of Court Act 1981. Publication of material “which creates a substantial risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced” will make the publisher liable for prosecution for contempt of court. Journalists are additionally reminded of the ‘Reporting Restrictions in the Criminal Courts’ guidance issued by the Judicial Studies Board.
- The FSA has so far secured a number of sentences of imprisonment (two suspended) in relation to insider dealing: Christopher McQuoid and James William Melbourne in March 2009; Matthew and Neel Uberoi in November 2009, Malcolm Calvert on 11 March 2010, Anjam Ahmad on 22 June 2010 and Neil Rollins due to be sentenced on 21 January 2011. Details of each case are available on the FSA website.
- The FSA is currently prosecuting 15 other individuals for insider dealing:
Name |
Trial date |
Christian Littlewood | Trial commencing 10 January 2011 |
Angie Littlewood | Trial commencing 10 January 2011 |
Helmy Omar Sa'aid | Trial commencing 10 January 2011 |
Bijal Shah | Trial commencing 19 September 2011 |
Truptesh Patel | Trial commencing 19 September 2011 |
Paresh Shah | Trial commencing 19 September 2011 |
Mitesh Shah | Trial commencing 19 September 2011 |
Neten Shah | Trial commencing 19 September 2011 |
Ali Mustafa | Trial commencing 19 September 2011 |
Pardip Saini | Trial commencing 19 September 2011 |
James Paul Sanders | Magistrates Court on 20 December 2010 |
Miranda Sanders | Magistrates Court on 20 December 2010 |
Christopher Hossain | Magistrates Court on 20 December 2010 |
James Swallow | Magistrates Court on 20 December 2010 |
Adam Buck | Magistrates Court on 20 December 2010 |
- The Financial Services and Markets Act 2000, gives the FSA powers to investigate and prosecute insider dealing, defined by The Criminal Justice Act 1993.
- The FSA has the power to compel people to provide information and to assist with its investigations. Providing false or misleading information in such circumstances can be a criminal offence and is punishable by up to two years imprisonment or a fine or both.
- Individuals with information about market abuse can call the FSA’s market abuse hotline on 020 7066 4900.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.