insider dealing

Charges Brought Against Former Trader and Former Broker Following FSA Insider Dealing Investigation

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On January 16, Paul Milsom, a former trader at the investment management arm of Legal & General, and Graeme Shelley, a former broker at Novum Securities, appeared at Westminster Magistrates Court charged with insider dealing.  Mr Milsom indicated an intention to plead guilty to one charge, encompassing 28 separate instances of passing information to Mr Shelley during the period of 2008 to 2010.  Mr Shelley correspondingly faces 28 counts of insider dealing.  It is alleged that profits of around £402,000 were split between the two defendants as a result of Mr Shelley placing contracts for difference in the knowledge that large trades placed by Mr Milsom would move the market in a certain direction.

The prosecution arose from a joint investigation by the FSA and the Serious Organized Crime Agency, marking the FSA’s largest insider dealing investigation to date.  Five other defendants have already been charged as part of the same investigation, reflecting the FSA’s ever increasing readiness to bring criminal prosecutions against those suspected of market abuse.

Confiscation Orders Made Against Investment Banker and Wife Convicted of Insider Dealing

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On August 20, Confiscation Orders (the Orders) totalling £1,534,000 were made against Christian Littlewood, a former Dresdner Kleinwort Wasserstein investment banker, and his wife Angie Littlewood. Press Release. 

The couple used inside information obtained through his employment to facilitate the placing of trades in eight separate stocks just prior to announcements to the market and were convicted and sentenced for insider dealing in February 2011.

The confiscation regime under the Proceeds of Crime Act 2002 (POCA) allows the court to assume that the proceeds of other trading that took place within the same period as the insider dealing represents the proceeds of crime. Both Mr and Mrs Littlewood have been ordered to pay £767,000, representing the benefit each obtained from insider dealing.

This is an example of the FSA’s increasingly tougher sanctions towards insider dealing. Tracey McDermott, director of enforcement and financial crime said “The Orders made today, coupled with the sentences previously imposed, should make it clear that insider dealing does not pay.”  

FSA Issues Final Notices to an Investment Banker and His Wife for Insider Dealing

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On 31 May 2012, the FSA issued Christian Littlewood and his wife, Angie, with final notices prohibiting them from performing any function in relation to any regulated activity. Between 1998 and 2008, Mr. Littlewood was employed by the investment bank Dresdner Kleinwort Wasserstein Ltd. As a result of his employment he had access to inside information relating to securities. Mr. and Mrs. Littlewood used the inside information obtained through his employment to facilitate the placing of trades in eight separate stocks just prior to announcements to the market. As a result of these trades, Mr. and Mrs. Littlewood, together with a third party friend of Mrs. Littlewood (Mr. Sa’aid), made profits of around £590,000.

The FSA’s action follows the conviction of Mr. and Mrs. Littlewood for criminal offences of insider dealing in February 2011. Final Notice for Christian Littlewood. Final Notice for Angie Littlewood.

Blue Index Trio Plead Guilty to Insider Dealing

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On 28 May 2012, the FSA announced that three defendants with links to Blue Index Ltd, a contract for difference brokerage, pleaded guilty to charges of insider dealing. These are James Sanders, a director of Blue Index, Miranda Sanders, his wife, and James Swallow, another director of Blue Index. Two further defendants were acquitted.

The prosecution alleged that inside information was leaked by Arnold McClellan, a senior partner in Deloitte Tax LLP, who was an insider to a number of mergers and acquisitions in US securities listed on the NYSE and NASDAQ exchanges, or by his wife, Annabel McClellan, who is the sister of Miranda Sanders. The information was used by James and Miranda Sanders to commit insider dealing. James Sanders disclosed the information to other people including James Swallow, who also used the information to commit insider dealing. The three defendants will be sentenced on 19 June 2012. FSA Announcement.