FACTBOX – Britain makes arrests in insider dealing probe

March 24, 2010

LONDON, March 24 (Reuters) – A raid on top banks and a hedge fund on Tuesday as part of an insider dealing investigation sent shockwaves through London’s financial centre, as British authorities try to establish their crime-fighting credentials.

It was the fifth set of arrests carried out by the Financial Services Authority (FSA) into insider dealing in the past two years. Here are key facts and recent events:

* March 23, 2010: A sweep by the FSA and the Serious Organised Crime Agency (SOCA), a special police unit, involved individuals from Deutsche Bank AG, Exane, part-owned by BNP Paribas SA, and U.S. hedge fund Moore Capital, among others. Seven people were arrested.

A squad of 143 officers raided 16 residential and business addresses in London and southeast England, seizing documents and computers. None of the six arrested have been charged or formally identified by British authorities, but some have been identified by sources.

City professionals passed inside information to traders who traded on the information and made “significant profits”, the FSA said.

* Ongoing: The FSA is prosecuting three other insider dealing criminal cases: Andrew King, Andrew Rimmington and Michael McFall (trial set for April 19): Christian and Angie Littlewood; and Neil Rollins.

* March 2010: FSA proposes that banks and financial firms should tape traders’ mobile phone conversations. It wants firms to tape all “relevant communications” on company-issued cellphones and to take “reasonable steps” to ensure bankers and traders do not carry out such communication on private phones. It has required firms to record conversations on fixed-line telephones for the last year.

* March 2010: Malcolm Calvert, a former partner of Cazenove, was jailed for 21 months for making 103,000 pounds ($155,000) from buying shares in companies just before takeovers were unveiled. The trades took place between 2003 and 2005, after Calvert retired in 2000, but he asked a friend to purchase shares based on tips he received from a source, and they split the proceeds.

Calvert was found guilty on five counts of insider dealing on a trio of corporate takeovers, but acquitted of seven other charges. He is appealing the case.

It was the most high profile win in the FSA’s crackdown to date, but the regulator was unable to find the “insider” who passed on the information.

* March 2010: The FSA says in its business review that its enforcement focus in 2010 will include leaks in public takeovers, the role of stock lending and the practice of “pre-sounding” investors before a deal.

* March 2010: The FSA says its new penalties policy could mean enforcement fines treble in size.

* November 2009: Matthew Uberoi and his father, Neel Uberoi, were found guilty of 12 counts of insider dealing. They made about 110,000 pounds from information provided by Matthew Uberoi while he was an intern at a corporate broking firm in the summer of 2006, dealing with takeovers and price sensitive deals.

* March 2009: Christopher McQuoid, a solicitor, and his father-in-law James Melbourne, were found guilty of insider dealing. McQuoid was general counsel at TTP Communications, and he handed information about a takeover of his firm by Motorola to Melbourne, who traded and made a 49,000 pound profit from the trade.

* March 2009: Hector Sants, FSA chief executive, said its first criminal prosecutions for insider dealing should be a warning.

“There is a view that people are not frightened of the FSA. I can assure you that this is a view I am determined to correct. People should be very frightened of the FSA.”

* 2008: The FSA said there was possible market abuse before 29 percent of takeover announcements in 2007 and 2006, prompting it to seek jail sentences and tougher fines after criticism it failed to flex its muscles.

* The FSA gained the power to criminally prosecute insider dealing cases in 2001, taking over from the Department of Trade and Industry, but only brought its first case in 2008.

It secured its first guilty verdict in two criminal insider dealing prosecutions in 2009.

FSA was last year also given the power to offer immunity and increased protection to whistleblowers in market abuse cases.

(Compiled by Steve Slater and Clara Ferreira-Marques; Editing by Louise Heavens) ($1 = 0.6664 pound) ((steve.slater@reuters.com; +44 207 542 4367; Reuters Messaging: steve.slater.reuters.com@reuters.net))


Wednesday, 24 March 2010 11:14:54RTRS [nLDE62N11T] {C}ENDS

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