Mitesh Shah, Neten Shah, Paresh Shah, Bijal Shah, Truptesh Patel, Ali Mustafa and Pardip Saini are alleged to have used confidential information to trade in 12 UK-listed firms over two years, including media group Reuters during its 2007 takeover by Thomson Corp of Canada. It is the largest insider dealing case to be brought before court by the Financial Services Authority (FSA).
The men, aged between 29 and 47 years old, spoke only to give their names, addresses and dates of birth before the case was referred to a higher Crown court for a hearing on 22 April. Apart from 29-year-old Mustafa, who was dressed in a leather jacket and walked with a swagger, the men were soberly dressed and impassive. The FSA is seeking the extradition of an eighth suspect linked to the so-called “printer” ring. Last month the City watchdog charged the men with 13 counts of insider dealing it alleges netted them £2.5m. Mitesh Shah was also charged with spread betting to launder proceeds.
INSIDER TRADING | FSA CRACKDOWN
• The FSA, whose enforcement wing has more than doubled to 450 staff since 2005 after hiring a raft of criminal lawyers and specialist staff, is on a quest to silence critics who accuse it of failing to prosecute senior employees at top institutions.
• The regulator has brought three successful criminal cases to date, including a case against Malcolm “Streaky” Calvert, a former partner at Cazenove, who was jailed for 21 months last month in its most high-profile victory to date.
• Calvert’s conviction was closely followed in March by the dramatic arrests of seven insider dealing suspects, including a managing director at Deutsche Bank, the head of sales trading at Exane, part-owned by France’s BNP Paribas, and a trader at hedge fund Moore Capital.
• Although the FSA’s most recent figures show unusual share price movements in around 29 per cent of takeover announcements, insider dealing cases remain notoriously lengthy, painstaking and tough to nail.
• In the Calvert case, the prison sentence fell well short of the seven-year maximum term for insider dealing – and two accomplices walked free.
• The FSA was unable to identify Calvert’s “primary insider” and source of share tips while the other accomplice, Bertie Hatcher, a friend who bought stock shortly before takeovers were announced, turned informant in return for a fine.