Individual sentenced to four years for insider dealing

In a prosecution brought by the Financial Services Authority (FSA) and heard at Southwark Crown Court Richard Joseph, age 43, has been found guilty of 6 counts of conspiracy to deal as an insider. He has been sentenced to four years on each count, which will be served concurrently.

Joseph’s trading resulted in a net profit of £591,117 on trading between September 2007 and July 2008.

Joseph, a former futures trader, was provided with confidential and price-sensitive information from two investment banks concerning proposed or forthcoming takeover bids.  The confidential and price-sensitive information was provided to Richard Joseph by Ersin Mustafa, a print room manager at JP Morgan Cazenove.  During the time that he was trading Richard Joseph transferred a substantial amount of money to Ersin Mustafa.

Attempts were made to disguise the receipt of this information including the use of numerous Pay As You Go mobile telephones - one of which was purchased using a false name and address - and webmail “drop boxes” where confidential documents containing price-sensitive information were placed for Joseph to access.  Having received this information, Joseph then placed spread bets in the expectation that when the information became public knowledge the share price would rise and he would make a profit. 

Ersin Mustafa, who is believed to be in north Cyprus, was also a source of inside information in the prosecution of Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah and Truptesh Patel who were convicted and sentenced in July 2012.  The link between these two cases could not be published before now.

In sentencing Richard Joseph the trial judge, His Honour Judge Pegden, remarked: 

“It is plain to me that you knew precisely what you were doing.  This was carefully planned and much discussed between you; before, during and after the trades.  This was not isolated criminal behaviour". 

The Judge also commented that there was a need for an element of deterrence when sentencing this case, not least because this type of behaviour is difficult and time consuming to detect.

Tracey McDermott, director of enforcement and financial crime, said:

“This conviction once again underscores our determination to take the strongest possible action against anyone involved in insider dealing.  Joseph embarked on a sophisticated scheme which was designed to enable him to profit from exploiting confidential price sensitive information and at the expense of other market users.  In less than a year his criminal conduct netted him sums of money most people can only dream of.  For a time he no doubt thought this was easy money. This verdict should send a clear message about the consequences to anyone else who might be tempted to do the same.”

Notes for editors

  1. The FSA has so far secured 22 further convictions in relation to insider dealing: Christopher McQuoid and James William Melbourne in March 2009; Matthew and Neel Uberoi in November 2009, Malcolm Calvert on 11 March 2010, Anjam Ahmad on 22 June 2010, Neil Rollins on 21 January 2011, Christian Littlewood and Angie Littlewood on 8 October 2010 and Helmy Omar Sa'aid on 10 January 2011 and Rupinder Sidhu on 15 December, and James and Miranda Sanders together with James Swallow in May 2012  and  Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah and Truptesh Patel on 27 July 2012, Thomas Ammann on the 13 December and Paul Milsom on 7 March.
  2. The FSA is currently prosecuting 6 other individuals for insider dealing:

Name

Trial date

Martyn Dogson                              

Trial date to be confirmed

Andrew Hind                                             

Trial date to be confirmed

Benjamin Anderson                                    

Trial date to be confirmed

Iraj Parvizi                                                   

Trial date to be confirmed

Richard Baldwin                                                   

Trial date to be confirmed

Graeme Shelley                                                   

Trial date to be confirmed

 

  1. The Financial Services and Markets Act 2000 gives the FSA powers to investigate and prosecute insider dealing, defined by The Criminal Justice Act 1993.
  2. Individuals with information about market abuse can call the FSA’s market abuse hotline on 020 7066 4900.
  3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
  4. The FSA will be replaced by the Financial Conduct Authority and Prudential Regulation Authority in 2013. The Financial Services Bill currently undergoing parliamentary scrutiny is expected to receive Royal Assent by the end of 2012.