Court Convicts Alleged Insider Dealing Operators

Kimberly Watson, Editor in Chief
July 23, 2012 /

Southwark Crown Court has found Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah, and Truptesh Patel guilty of insider trading offences between 2006 and 2008, when they were arrested, following a four and a half month trial.

The defendants will be sentenced on Friday 27th July 2012.

Mitesh Shah was acquitted of insider dealing.

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.

This was the longest and most complex prosecution brought by the Financial Services Authority (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.

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.

“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 conduct of the individuals in this case and the details of the scheme which have now been revealed are important reminders to firms of the need to protect inside information throughout its life so that it cannot be misused.”

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.

 

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