In a case brought by the Financial Services Authority (FSA) and heard at Southwark Crown Court, Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah and Truptesh Patel have today been sentenced for insider dealing contrary to section 52 of the Criminal Justice Act 1993 for offences committed between 2006 and 2008.
Ali Mustafa, Pardip Saini and Paresh Shah were sentenced to 3 years 6 months, Neten Shah was sentenced to 18 months, Bijal Shah and Truptesh Patel were sentenced to 2 years. Confiscation and costs orders will be dealt with at a later date.
In passing sentence His Honour, Mr Justice Pegden QC, noted:
The insider dealing in this case was not isolated criminal behaviour. The meticulous and exhaustive FSA inquiry has revealed exactly how your cheating was perpetrated.
Tracey McDermott, acting director of Enforcement and Financial Crime Division, said:
This is another significant milestone in our fight against insider dealing. It demonstrates that we can successfully present the issues in a long and complex case so that a jury understands them and has the confidence to convict criminals involved in insider dealing rings.
This lengthy and complex trial followed many thousands of hours of work by a dedicated team of investigators across our enforcement, markets and intelligence teams to unravel a sophisticated scheme which was designed to enable the defendants to profit from exploiting confidential price sensitive information.
They thought that by attempting to cover their tracks they would get away with their criminal conduct. This investigation and these sentences should send a clear message to anyone else who might be tempted to do the same. Insider dealers are criminals, no more and no less, and we are committed to using all the tools at our disposal to bring them to justice.
This was the longest and most complex prosecution brought by the FSA to date. The case involved examining many hundreds of trading accounts and telephone records, to build up a picture of the timing and degree of contact between those in the insider dealing ring.
The defendants obtained confidential and price-sensitive information from investment banks concerning proposed or forthcoming takeover bids. They then used a large number of accounts to place spread bets ahead of those announcements knowing that when the information became public knowledge the price would rise. The defendants were convicted of making a combined profit of £732,044.59 on trading between 1 May 2006 and 31 May 2008. It was a sophisticated and complex attempt to deal on inside information over a long period.
The six defendants were convicted of offences of disclosure of inside information and dealing whilst in possession of it in respect of six companies stocks:
Ali Mustafa in respect of Reuters and Vega.
Pardip Saini, Paresh Shah, Bijal Shah and Truptesh Patel in respect of Reuters, Biffa, Premier Oil and Enodis, and Vega. Additionally all except Truptesh Patel were found guilty in respect of Thus. Neten Shah was found guilty in respect of Vega and Thus.
Background
- The FSA has previously secured 14 convictions 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, Neil Rollins on 21 January 2011, Christian Littlewood and Angie Littlewood on 8 October 2010 and Helmy Omar Sa'aid on 10 January 2011, Rupinder Sidhu on 15 December 2011, and James and Miranda Sanders together with James Swallow in May 2012. Details of each case are available on the FSA website.
- The FSA is currently prosecuting 4 other individuals for insider dealing:
Thomas AmmannTrial date to be confirmed
Christina Weckwerth Trial date to be confirmed
Jessica Mang Trial date to be confirmed
Richard Joseph Trial date to be confirmed - The Financial Services and Markets Act 2000 gives the FSA powers to investigate and prosecute insider dealing, defined by The Criminal Justice Act 1993.
- 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.
- The FSA will be replaced by the Financial Conduct Authority and Prudential Regulation Authority in 2013. The Financial Services Bill currently undergoing parliamentary scrutiny is expected to receive Royal Assent by the end of 2012.
