UK Convicts Finance Professionals Over Insider Trading

Two senior finance professionals have been found guilty of insider trading in one of UK’s most high-profile cases. A jury in Southwark Crown Court convicted Martyn Dodgson, an ex-Deutsche Bank director and Andrew Hind, an ex-finance director at Topshopin after the completion of a trial that lasted 12 weeks. Sentencing will be done at a later date and penalties could include prison time for up to seven years and a confiscation order as well.

The jury acquitted Andrew Harrison, a former Panmure Gordon broker and day traders Benjamin Anderson and Iraj Parvizi after finding not enough evidence to convict them. The charges were filed by the Financial Conduct Authority (FCA) after nine years of investigation. According to the FCA, Dodgson leaked confidential information to Hind who then passed it on to others for carrying out the trades. Anderson and Parvizi have maintained that while they conducted trades using Dodgson’s information, they had been unaware that the information was confidential.

The group met regularly to exchange information for illegal trades that netted them profits of £7.4 million. The FCA has accused the group of covering up its activity through the use of nicknames, encrypted devices and disposable phones. The group traded on stocks such as Scottish & Newcastle, Just Retirement and Paragon Group.

Although Dodgson denied any wrongdoing, the FCA authorities were able to access an encrypted disk found at his residence that contained incriminating files including a spreadsheet having coded mentions of the trades. Six other USB disks were also found but could not be accessed.

Dodgson is the most senior finance executive to be successfully charged with insider trading. The FCA has touted this as an example of being able to successfully bring offenders to the book.

In a statement, Mark Steward, FCA Director of Enforcement and Market Oversightsaid,

Dodgson was an experienced and well-paid banker, well aware that what he was doing constituted a criminal offence and who conspired with Hind to abuse our market and to profit at the expense of the investing public.The FCA is committed to detecting this kind of abuse and make the perpetrators fully accountable in accordance with the law

The two convictions are the latest victory for Operation Tabernula, a long-running investigation into insider trading that was launched by the FCA. In 2015, three traders were charged and found guilty of participating in an insider trading scheme which netted them a profit of £1 million. The operation has thus far resulted in five convictions and three acquittals. The FCA’s other investigations have so far resulted in 28 convictions.

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