The financial services watchdog is determined to show that it is serious about cracking down on insider trading. The Financial Conduct Authority (FCA) – as it is now known – secured two more convictions for its metaphorical trophy cabinet on Monday.
Accountant Andrew Hind and former Deutsche Bank director Martyn Dodgson were found guilty on Monday for insider trading offences in the Tabernula case, although the three other men on trial – former Panmure Gordon stockbroker Andrew Grant Harrison, private day trader Benjamin Anderson and former Aria Capital director Iraj Parvizi – all walked free.
The case's nickname, which comes from the Financial Services Authority and Serious Organised Crime Agency operation that prompted it, may sound familiar. Monday's convictions were the fourth and fifth to result from the operation, which began with a dramatic series of morning raids in March 2010.
Equities trader Paul Milsom, who was the first to be convicted after pleading guilty, was sentenced to two years in prison in March 2013, when Tracey McDermott was director of enforcement. Former Moore Capital trader Julian Rifat, who pled guilty in 2014, was sentenced to 19 months imprisonment and slapped with a £100,000 fine.
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Graeme Shelley also pled guilty but avoided jail time, instead being given a two-year suspended sentence.
Operation Tabernula, however, is not the only insider trading exercise the FCA has under its belt, although it is, in the watchdog's own opinion, the largest and most complex.
Since March 2009, the watchdog has secured 28 convictions for insider trading. Outside of the criminal courts, it has also gone after insider deals with its market abuses regulatory code, perhaps most notably by issuing a £450,000 fine to former JP Morgan banker Ian Hannam in 2014.
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Despite the numerous scalps the FCA has so far collected, some will note that yesterday's verdict resulted in the majority of the men who had been sat in the dock since January being found not guilty, raising questions over how effective the agency really is as a prosecutor.
Michael Potts, managing partner at Byrne & Partners, who represented Anderson in the trial, told City A.M. that some of the arguments put forward by the FCA in its dealings to date showed that its grasp on the world of trading, and what typical conversations took place within it, was a little shaky.
"Sometimes the FCA's a little bit unrealistic about the markets and generally how they work," Potts said. "The reality is there’s a lot of rumours milling around all the time."
He added that trading was a "fluid and fast world with a lot of people telling you all sorts of things and you have to try and pick out the ones that are the most reliable".
Potts' words echo those of the closing argument given for Parvizi, whose lawyer Orlando Pownall QC remarked that, in trading, "rumour makes the world go round and fuels speculation".
Others have suggested that the length of time it took to secure Monday's convictions is a particularly gloomy cloud for the FCA's silver lining.
"The FCA will attempt to herald this as another success but given the length of investigation and the costs, does it really justify this headline," asks Amjid Jabbar, partner at Stokoe Partnership.
"For my client personally, it’s been an incredibly long journey," Potts added, although he pointed out that he thought the delays were "through no fault of anyone in particular".
However, some were more positive about what Monday meant for the future of the FCA. Charles Kuhn, partner at Hickman & Rose, remarked: "The results of this sophisticated and long-running investigation are a feather in the cap for the embattled FCA, and a good start for its recently appointed chief, Andrew Bailey."