British Court Sentences Six Men for Insider Trading

A British court has sentenced six men for their role in a multi-year insider trading scheme.

The case, which involved trades made between 2006 and 2008, was described by the Financial Services Authority on Friday as the “longest and most complex prosecution” the regulator has ever brought. In order to untangle this insider trading scheme, the F.S.A. said it spent thousands of hours pursuing the case, parsing through hundreds of trades and telephone records.

According to the F.S.A., the men designed an elaborate insider trading ring that allowed them to profit on potential or upcoming takeover offers. 

Ali Mustafa, a former UBS employee who worked in a printing room, obtained confidential information, which he then passed along to a group of traders. Between May of 2006 and 2008, the group made £732,044.59 in profits from bets on companies like Reuters, Vega, Premier Oil and Enodis.

Mr. Mustafa, along with two traders, Pardip Saini and Paresh Shah were sentenced to 3 years and 6 months. The rest of the traders, Bijal Shah, Truptesh Patel and Neten Shah, received two years or less.

“This is another significant milestone in our fight against insider dealing,” Tracey McDermott, the acting director of the F.S.A.'s enforcement and financial crime division, said in a statement. Financial Crime Division. “This lengthy and complex trial followed many thousands of hours of work by a dedicated team of investigators across our enforcement, markets and intelligence teams to unravel a sophisticated scheme which was designed to enable the defendants to profit from exploiting confidential price sensitive information.”

Since the financial crisis, the British regulator has been trying to step up its effort to police securities violations. Earlier this year, it fined Ian Hannam, JPMorgan Chase's former global chairman of equity capital markets, for disclosing insider information.

Even so, the regulator has faced scrutiny for its role in the recent interest rate manipulation scandal. Lawmakers have raised questions about why the F.S.A. didn't move more swiftly to rein in banks activities.