Insider dealers sentenced in Operation Tabernula trial

In a case brought by the Financial Conduct Authority (FCA), Martyn Dodgson, a senior investment banker, and Andrew Hind, a Chartered Accountant, have today been sentenced at Southwark Crown Court to 4.5 years and 3.5 years imprisonment, respectively, having been convicted of conspiring to insider deal between November 2006 and March 2010. Dodgson’s sentence is the longest ever handed down for insider dealing in a case brought by the FCA.

Confiscation proceedings will also be pursued against both defendants.

This investigation was conducted in partnership with the National Crime Agency.

In sentencing Dodgson and Hind the trial judge, His Honour Judge Pegden, remarked that their offending was 'persistent, prolonged, deliberate, dishonest behaviour.'

Mark Steward, Director of Enforcement and Market Oversight, said

'This case involved serious offending over a number of years, conducted in a sophisticated way using deliberate techniques to avoid detection. Dodgson was an approved person who was entrusted by his employer with sensitive and valuable information. He betrayed that trust by exploiting the information for his own benefit, conspiring with Hind to deceive the market

'Insider dealing is ever more detectable and provable.  And this case shows lengthy terms of imprisonment, not profits are the real result.'

Oliver Higgins, National Crime Agency Branch Commander, said: 'Dodgson and Hind tried to prevent us from uncovering their insider dealing by using unregistered mobile phones, encoded and encrypted records, and transferring benefit using cash and payments in kind.

'The NCA were able to support the FCA by carrying out surveillance and providing niche capabilities, including the deployment and monitoring of a listening device that recorded key conversations.

'We will continue to work with our partners to pursue and prosecute anyone who seeks to undermine financial systems, abuse markets, and poses a serious economic crime threat to the UK.'

The guilty defendants

Martyn Dodgson (5 October 1971) – during the period covered by the indictment Dodgson was employed by Morgan Stanley, Lehman Brothers and Deutsche Bank. He worked at Morgan Stanley as a Vice President in Global Capital Markets until January 2007, and then at Lehman Brothers as an Executive Director in the European Investment Banking Division from July 2007 to September 2008. He moved to Deutsche Bank in October 2008 as a Director in the Corporate Broking Department and was later promoted to Managing Director. Dodgson was Financial Services Authority (FSA) approved throughout the period.

Andrew Hind (16 April 1960) – is a businessman, a property developer and a qualified Chartered Accountant.

Overview of the facts

Dodgson and Hind, who were close personal friends, agreed to deal secretly, sometimes on the basis of inside information.

Dodgson sourced inside information from within the investment banks at which he worked, either through working on transactions himself or through being able to glean what his colleagues were working on.  He passed on this inside information to Hind who then affected secret dealing for the benefit of Dodgson and himself.

The defendants put in place elaborate strategies designed to prevent the authorities from uncovering their activities. These included the use of unregistered mobile phones, encoded and encrypted records, safety deposit boxes and the transfer of benefit using cash and payments in kind.

The FCA relied on five acts of insider dealing to prove this conspiracy.   The five acts of dealing related to the following companies:

  • Scottish & Newcastle plc in October 2007
  • Paragon Group of Companies plc in July 2008
  • Just Retirement plc in October 2008
  • Legal & General plc in February 2009
  • BSkyB plc in March 2010

In many other instances of trading effected by Hind during the Indictment period, Dodgson or his employer was advising or connected with the company traded or with a company party to a relevant corporate transaction.

The Operation Tabernula investigation

This has been the FCA’s largest and most complex insider dealing investigation. The offending in this case was highly sophisticated and took place over a number of years. The investigation (conducted in partnership with the National Crime Agency) was demanding and time-consuming. Investigators, forensic accountants, lawyers, markets experts, intelligence analysts and digital forensic specialists pooled their skills to unravel the conspiracy.  This was achieved through painstaking analysis of trading, financial and communications data, documentary evidence from the investment banks, and the material seized during searches under warrant. Surveillance was also deployed.

These two convictions – alongside those of Paul Milsom, Graeme Shelley and Julian Rifat – brings to five the number of convictions secured in the Operation Tabernula insider dealing investigation.

Notes to editors

  1. The FCA, and previously the Financial Services Authority, have secured 28 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, Rupinder Sidhu on 15 December, and James and Miranda Sanders together with another individual in May 2012 and Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah and Truptesh Patel on 27 July 2012, Thomas Ammann on 13 December 2012, Paul Milsom on 7 March 2013, Richard Joseph on 11 March 2013 and Graeme Shelley on 27 March 2014, Julian Rifat on 7 November 2014, Ryan Willmott on the 26 February 2015,  Paul Coyle on  3 March 2015 and Damien Clarke on 15 March 2016.
  2. The Financial Services and Markets Act 2000 gives the FCA powers to investigate and prosecute insider dealing, defined by The Criminal Justice Act 1993.
  3. Individuals with information about market abuse can call the FCA’s market abuse hotline on 020 7066 4900.
  4. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  6. Find out more information about the FCA

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