Two convicted of insider dealing in financial shares
Two defendants – a senior investment banker and a Chartered Accountant – have been convicted of conspiring to insider deal between November 2006 and March 2010 in a case brought by the Financial Conduct Authority and following a three-month trial at Southwark Crown Court.
The two, Martyn Dodgson and Andrew Hind, were found guilty of insider dealing on a number of shares including Legal & General, Just Retirement and Paragon Group. Three other defendants, Andrew Grant Harrison, Ben Anderson and Iraj Parvizi, were acquitted. Sentencing will take place on a date to be fixed and confiscation proceedings will also be pursued against both defendants.
Guilty defendant Martyn Dodgson was employed by Morgan Stanley, Lehman Brothers and Deutsche Bank. He worked at Morgan Stanley as a vice president in Global Capital Markets until January 2007, and then at Lehman Brothers as an executive director in the European Investment Banking Division from July 2007 to September 2008.
He moved to Deutsche Bank in October 2008 as a director in the Corporate Broking Department and was later promoted to managing director. He was Financial Services Authority approved throughout the period.
The other guilty defendant was Andrew Hind, a businessman, property developer and a qualified Chartered Accountant.
Mark Steward, director of enforcement and market oversight at the FCA, said: “This was an extraordinary and complex case of a type not prosecuted in this country before.
"The message is loud and clear that the FCA will not tolerate sophisticated predatory criminals abusing our markets. This case demonstrates our capability and determination to root out this kind of abuse and ensure our market and the investing public are properly protected.
“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.”
Mr Dodgson and Mr Hind, who were close personal friends, instigated this insider dealing conspiracy. They agreed to deal secretly, sometimes on the basis of inside information. Mr Dodgson sourced inside information from within the investment banks at which he worked, either through working on transactions himself or through being able to glean what his colleagues were working on. He passed on this inside information to Mr Hind who acted as a ‘middle man’.
The defendants put in place elaborate strategies designed to prevent the authorities from uncovering their activities. These included the use of unregistered mobile phones, encoded and encrypted records, safety deposit boxes and the transfer of benefit using cash and payments in kind.
The two were convicted as part of the Operation Tabernula investigation - which the FCA says has been its largest and most complex insider dealing investigation.
The two convictions – alongside those of Paul Milsom, Graeme Shelley and Julian Rifat – brings to five the number of convictions secured in the Operation Tabernula insider dealing investigation. The investigation was conducted by the FCA in partnership with the National Crime Agency.