Six British Asians have been convicted of offences relating to insider dealing ring that made a profit of over £730,000 between 2006 and 2008 after a four-and-a-half month trial at the Southwark Crown Court, the Financial Services Authority (FSA) said on Tuesday.
The six are Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah, and Truptesh Patel. The six, who were arrested 2008, are due to be sentenced on Friday. One of the accused, Mitesh Shah, was acquitted of insider trading.
The FSA said this was the longest and most complex prosecution brought by it, and that 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 were convicted of making a combined profit of £732,044.59 on trading between May 1, 2006, and May 31, 2008. It was a sophisticated and complex attempt to deal on inside information over a long period,” the FSA said.
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.
Tracey McDermott, acting director of Enforcement and Financial Crime Division, said: “The defendants were involved in a long running, sophisticated and very profitable scheme. Indeed, several of the defendants derived the majority of their income from the scheme.”
They took a number of steps to reduce the likelihood of detection and continued, throughout the trial, to deny any wrongdoing.
“Our success in bringing these individuals to justice is the result of innovative and determined work done across our markets, intelligence and enforcement teams over several years.” She added: “This sort of behaviour poses a significant risk to the integrity of markets and cheats honest investors. We will continue to use all of the tools at our disposal to ensure those who seek to abuse the system have nowhere to hide”. 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.
