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lehman 5/11
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Insider trading case highlights the challenges facing prosecutors
May 10, 2016 | Financial Times
By Caroline Binham
...The pair were overheard discussing Hind’s “man” who had moved from Lehman to Deutsche and was “hungry”. -
The five men involved in the UK's biggest ever insider trading case
May 11, 2016 | The Independent
By Suzi Ring
...According to the prosecution, while he was at Lehman, Dodgson fed tips on the takeovers of Scottish & Newcastle Ltd. and mortgage provider Paragon Group of Companies Plc to Hind, who passed them to Parvizi and Anderson to trade on.
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Former Lehman Personnel - Marty Dogson
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Insider trading case highlights the challenges facing prosecutors
May 10, 2016 | Financial Times
By Caroline Binham
It is the end of the road for “Fruit” and “Nob”.
Rather than being an ageing folk duo or 1970s children’s TV characters, they were insider traders who were convicted on Monday of a conspiracy that netted £1.1m profit between them.
Fruit was the nickname used by Martyn Dodgson, a former Deutsche Bank corporate broker who once advised the government on its bailed out banks. Nob was his family friend, Andrew Hind, a one-time finance director at Sir Philip Green’s Topshop.
Each was convicted of a single count of insider trading at London’s Southwark Crown Court and faces a maximum seven-year jail term when sentenced, possibly as soon as Thursday.
But three other men accused of working with them are enjoying an altogether different fate. The jury acquitted Andrew “Grant” Harrison, Dodgson’s friend who was a corporate broker at Panmure Gordon, and two “prolific” day traders, Ben Anderson and Iraj Parvizi, who worked out of an office in London’s Belgravia.
The split verdict in what was the UK’s biggest ever insider dealing investigation — which the Financial Conduct Authority estimates cost £14m — speaks to the difficulties authorities have as they try to crack down on trading ahead of market-moving news. It comes in the middle of a dearth of new cases in the UK and as US authorities struggle with adverse court rulings that make it harder to win convictions.
“This is the jury system at work,” said Michael Bowes QC, who successfully prosecuted the regulator’s first insider-trading case. “Even when a conspiracy is established, the prosecution must establish that each person was a knowing party to it. There are a lot of steps to prove as you go along that chain.”
The eight-year probe was originally mounted by the old Financial Services Authority and continued by its successor, the FCA. It was intended as a riposte to criticism that the watchdogs have only prosecuted small fry rather than “proper” City insiders.
“This is a demonstration of the fact that jury trials are never straightforward and sometimes they result in unusual outcomes,” said Chris Brennan, an Addleshaw Goddard partner and former enforcement official, pointing to the recent acquittal of brokers accused of Libor-rigging, even after their alleged co-conspirator, Tom Hayes, was convicted in an earlier trial.
“My question, in the absence of other insider-trading trials coming to court, is what the future of FCA enforcement looks like, and what the priorities are post-Libor and forex? Is it still reflected in the pursuit of individuals for market abuse and insider trading?”
In addition to the convictions of Dodgson and Hind, the FCA has already secured guilty pleas from three other people, Julian Rifat, a former trader at Moore Capital, Paul Milsom, an ex-equities trader at Legal & General’s investment arm, and Graeme Shelley, a former broker at Novum Securities.
But in the time that the case has taken to get to trial, the financial crisis that provided the backdrop to many of the trades in question has come and gone. And the rampant abnormal price movements, which once preceded three out of every 10 UK deal announcements, have become far less common. In the latest statistics available, they occurred before just 14 per cent of deals in 2014, although there was a slight uptick as merger activity blossomed — and as the number of insider-trading trials have waned.
At the same time, FCA enforcers have had to divert much of their energy to other scandals, such as the mis-selling of payment protection insurance, and the rigging of Libor and foreign-exchange benchmarks: Operation Tabernula is the first contested trial in nearly four years and no others are due to reach trial in the near future...
...Profile: Martyn Dodgson
Former broker at Deutsche Bank and Lehman Brothers, the 44-year-old advised the government on bailed-out banks. Dodgson, aka “Fruit”, was arrested after a late-night drinking bout with colleagues. The insider passed information to a middleman who then placed trades. He also kept a spreadsheet found on a military-grade encrypted device with a “Lamborghini 55” password detailing his assets and liabilities, with a target net worth of £5m. Previous conviction for drink driving.
Verdict: Guilty...
...Even during the trial it was obvious Mr Parvizi’s loose tongue could get him into trouble: during the same cross-examination he was cautioned by the judge against self-incrimination for possible market abuse. He admitted spreading false rumours on stock he had large positions in, including when he tried to revive an old takeover rumour around BSkyB by calling a Financial Times journalist in 2010, days before his arrest.
Tabernula was the first FCA trial to use wiretap evidence: Mr Parvizi and Mr Anderson’s office was bugged in October 2008. What it gleaned was seemingly key but the pair’s acquittal will raise questions over whether the FCA was right to use what is legally tricky and resource-intensive evidence.
The pair were overheard discussing Hind’s “man” who had moved from Lehman to Deutsche and was “hungry”.
For full story: http://www.ft.com/intl/cms/s/0/ddb82d9e-1686-11e6-9d98-00386a18e39d.html#axzz48K6tU7Ll
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The five men involved in the UK's biggest ever insider trading case
May 11, 2016 | The Independent
By Suzi Ring
Two financial professionals accused of making 7.4 million pounds ($10.7 million) with three others on confidential information about six stocks have been found guilty by a London court, with the other men acquitted.
Here’s what you need to know about them.
1. Martyn Dodgson
Former Deutsche Bank managing director
Age: 44
Nickame: FruitVerdict: Guilty
Well-spoken and polite, Dodgson grew up and went to university in Lancaster, graduating with a first-class degree in economics.
After qualifying as an accountant he moved into investment banking, working at a number of prestigious firms including: Cazenove, UBS Group AG, Lehman Brothers Holdings Inc. and Deutsche Bank AG.
A chance meeting with accountant Andrew Hind at his brother’s bachelor party in 2001 — Hind was his brother’s boss — led to a friendship and a trading arrangement.
According to the prosecution, while he was at Lehman, Dodgson fed tips on the takeovers of Scottish & Newcastle Ltd. and mortgage provider Paragon Group of Companies Plc to Hind, who passed them to Parvizi and Anderson to trade on.
He did the same in relation to other companies while working at Deutsche Bank. Dodgson and Hind claimed they only discussed public information, drawing on Dodgson’s market knowledge to help Hind’s trading. They said any covert methods used were only out of concern for Dodgson’s job because he hadn’t told his employers about the arrangement. Dodgson never met Anderson or Parvizi.
“The combination of being out late and drinking combined with the shock and fear of what my wife and family were going through, I suspect, made me act with the maximum amount of defensiveness” —Dodgson said on the witness stand while talking about why he lied in his interview after arrest...
For full story: http://www.independent.co.uk/news/business/news/martyn-dodgson-insider-trading-deutsche-bank-lehman-brothers-a7022041.html
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Former Lehman Personnel - Marty Dogson
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