Six arrested over insider dealing

[David Guyatt]

http://www.guardian.co.uk/business/2010/...CMP=AFCYAH

Six arrested over insider dealing

City professionals are among those held after the financial watchdog carried out raids on 16 addresses in its 'largest-ever operation against insider dealing'

Jill Treanor

guardian.co.uk, Tuesday 23 March 2010 12.16 GMT

Dawn raids at 16 addresses were carried out by the City regulator this morning as it attempted to close down a "sophisticated and long-running insider dealing ring".

The first operation carried out jointly between the Financial Services Authority and the Serious Organised Crime Agency involved 143 personnel in a swoop on 16 addresses in London, the south east and Oxfordshire.

The FSA described the raids as its "largest-ever operation against insider dealing" and said that six men, including two senior City professionals at leading institutions and one City professional at a hedge fund had been arrested on suspicion of being involved in a sophisticated and long-running insider dealing ring.

They are being held at police stations in London, Kent and Oxford and are suspected of passing inside information to traders - either directly or via middlemen - who traded based on this information and have made significant profits.

Hector Sants, chief executive of the FSA, has warned the City to be "afraid" of the regulator and last week set out plans for a hiring spree to help bolster its investigations of insider dealing, a crime that is notoriously difficult to prove.



As he launched the FSA's business plan last week, Sants said this was the "key year" to demonstrate the FSA was serious on cracking down on such City crimes. There would be a "significant" increase in criminal cases and enforcement actions, he said, reiterating his view that the amount of insider dealing in the City was "unacceptable".

But, since 2008 the FSA has been focusing on this area and this is the fifth set of arrests carried out since then. Four people have been jailed - and another person received a suspended sentence - while three other insider dealing cases are set for trial.

The most recent case to result in a jail term was earlier this month after Malcolm Calvert, a former partner at the blue-blooded City firm Cazenove, was found to have used an unknown insider to get information about a number of proposed mergers between 2003 and 2005.

(my emphasis)

[Jan Klimkowski]

Fixed the quote:

Hector Sants, chief executive of the FSA, has warned the taxpayer to be "afraid" of the regulator and last week set out plans for a hiring spree to help bolster its huge bonuses and vacuuming of public cash, crimes that are notoriously difficult to prove.

[Jan Klimkowski]

However, just in case there's meat on them bones, here is Zero Hedge's description of the investments of the major hedge fund involved:

Moore Capital Busted In Biggest Ever Insider Trading Raid In UK

Submitted by Tyler Durden on 03/23/2010 12:52 -0500

Earlier today the FSA announced that in the first ever operation carried out between British regulators and the Serious Organized Crime Agency,"16 addresses have been searched this morning in London, the South East and Oxfordshire in the FSA’s largest ever operation against insider dealing."

Furthermore, " Six men including two senior city professionals at leading city institutions and one city professional at a hedge fund have been arrested on suspicion of being involved in a sophisticated and long-running insider dealing ring." And what has just been announced by the BBC is that multi-billion hedge fund Moore Capital, run by billionaire Louis Bacon, is likely about to suffer the same fate as our very own Galleon.

From the FSA press release:

It is believed that the city professionals passed inside information to traders (either directly or via middlemen) who traded based on this information and have made significant profits as a result.

The operation was carried out by 143 FSA personnel together with officers from SOCA as part of a joint investigation that commenced in late 2007.

The BBC's Roger Peston updates:

I understand that the hedge fund raided by the FSA and SOCA this morning was Moore Capital.

This is a huge development as Moore Capital has long been one of the world's largest and best performing hedge funds. The fallout of this case will be severe for hedge funds both in the UK and across the Atlantic.

(Documentation at url)

Here is a summary of Moore's top holdings, which will likely now follow the same firesale fate as Galleon's. The biggest holding: Bank Of America, at just over $534 million worth.

Bank of America: $534 million
Max Capital Group: $223 million
Mastercard: $106 million
SPY: $103 million
EEM: $93 million
CME Group: $83 million
Assured Guaranty: $74 million
Trading Emissions: $58 million
Banco Santander: $55 million
Citigroup: $45 million

And a whole lot of unknown bond and CDS holdings

http://www.zerohedge.com/article/moore-c...ng-raid-uk

[Jan Klimkowski]

Seventh arrest in FSA insider dealing crackdown

Another City professional arrested in London
FSA could still be months away from bringing charges

A seventh man was arrested today as the Financial Services Authority (FSA) continued its attempt to smash "a sophisticated and long-running insider dealing ring". The arrest of a City professional in London came as six other men began to be released on police bail after questioning following their arrest on Tuesday – in what the FSA described as its largest ever operation against insider dealing.

The FSA could still be months away from bringing charges against the seven men whom it suspects of passing inside information to traders – either directly or via middlemen – who then traded on this information to make profits. Insider dealing takes place when individuals trade on information that is not widely known in the market, for instance about takeover bids that are yet to be made pubic.

The authorities have not formally named any of the individuals involved but their identities have begun to emerge. They are Julian Rifat, a trader at hedge fund Moore Capital; Martyn Dodgson, a managing director in the corporate broking arm of Deutsche Bank; Graeme Shelley, a trader at stockbroker Novum Securities; Clive Roberts, head of European sales trading at Exane, a stockbroking joint venture with French bank BNP Paribas; and Iraj Parvizi, a director of fund Aria Capital.

The FSA, which has warned the City to "be afraid" of its crackdown on dirty dealing, raided 16 premises with the help of 143 of its own employees and officers from the Serious Organised Crime Agency (Soca) on Tuesday. It is the first time the City regulator had worked with Soca. The move was seen by the City as an attempt by the FSA to show determination in eradicating insider dealing, which has been traditionally difficult to prosecute.

The FSA, which has only secured five sentences of imprisonment for insider dealing, said the raids this week were part of an investigation that had begun in late 2007. The organisation was reluctant to release fresh information but, announcing the arrest of the seventh man, said: "Following questioning, the individuals will be released on bail."

http://www.guardian.co.uk/business/2010/...-crackdown