Charges brought in insider dealing case, and a senior broker goes to jail.
Seven men were charged this week following a massive investigation into an alleged insider dealing ring. They are accused of making unlawful profits of about £2.5m over a two-year period. One of the accused has also been charged relating to money laundering offences.
The men were charged with "[conspiring] together and with others to deal as an insider in price affected securities relating to shares" in a long list of takeover targets between 2006 and 2008.
Companies involved included Misys (LSE: MSY), Morgan Crucible (LSE: MGCR), Laidlaw International, Reuters, Biffa, Abbot Group, Premier Oil (LSE: PMO), Vega Group, GCap Media, Fiberweb (LSE: FWEB), Enodis and Thus.
The charges are the result the Financial Services Authority's 'Operation Saturn', an investigation lasting nearly two years, involving a team of 35 investigators, lawyers and support staff. They have examined more than 75 electronic devices containing more than 200,000 files, 130 individual trading accounts, and have taken more than 250 witness statements.
According to reports, the initial arrests two years ago involved junior members of UBS's administrative staff, and a former subcontractor of JP Morgan Cazenove. They are suspected of having leaked information from the printing operations used by investment banks when preparing documents for company takeovers.
Busy month
All things considered, it has been a busy month for the FSA. Earlier in the month, Malcolm Calvert, a former partner and equities market-maker at stock broker Cazenove, was sentenced to 21 months in prison for insider dealing.
Separately, a senior investment banker and his wife have also been charged with insider dealing. In that case, a third man has also been extradited from the Comoros Islands, the first time that the FSA has sought the extradition of a suspect from abroad to face criminal charges in the UK.
And last week, seven people were arrested in the first operation carried out jointly between the FSA and the Serious Organised Crime Agency (SOCA). The employees of Deutsche Bank, Exane BNP Paribas, US hedge fund Moore Capital and London broker Novum Securities, are suspected of insider dealing.
Gartmore
In an unrelated case, shares in Gartmore (LSE: GRT) slumped by more than 30% yesterday after the suspension of its top fund manager.
According to Citywire, Guillaume Rambourg has been suspended following an internal investigation found that he was requesting the company's dealers to favour particular brokers, in breach of the company's internal guidelines, which are intended to ensure that it complies with the FSA's regulations regarding 'best execution'.
A top executive of the company publicly criticised the suspension, describing Gartmore's internal rules as 'excessive'.
The shares trade at 140p, up 12% on Thursday's close, but down 36% on December's flotation price of 220p.
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