FCA v Dodgson, Hind, and others.

Posted on 15/05/2016 · Posted in Criminal Cases, Expert Witness

In the UK’s biggest ever insider trading case, and after an investigation lasting 9 years and a trial lasting 12 weeks, two men were convicted and three acquitted at Southwark crown Court earlier this week. The convicted men, Martyn Dodgson, a former managing director at Deutsche bank and Andrew Hind, a chartered accountant, were sentenced on 12th May 2016. They faced a maximum sentence of 7 years imprisonment although the longest a defendant has been jailed in the UK for this crime is 4 years. Confiscation proceedings will also be pursued against profits considered to be the proceeds of their crime.

The case, conducted in partnership with the National Crime Agency and code-named Operation Tabernula (Latin for “little tavern”), represents a partial success for the Financial Conduct Authority. It comes some 6 years after a dramatic series of dawn raids in March 2010 when 7 people were arrested. The arrests, which shocked London’s financial community, showed that the regulator (at that time the FSA) would take a much more robust approach following the financial crisis. Mark Steward, the FCA’s director of enforcement and market oversight said: “This was an extraordinary and complex case of a type not prosecuted in this country before…(it) demonstrates our capability and determination to root out this kind of abuse”.

Titles are but nicknames, and every nickname is a title.”
Thomas Paine

The prosecution lawyers had told the court that Mr Dodgson passed information to Mr Hind who acted as ‘middle man’, sending it on to the traders who made deals totalling some £7.5 million. This secret insider-dealing conspiracy was based on information gained by Dodgson through his own work and by information picked up from what his investment banking colleagues were working on. The group were accused of using high-end encryption systems, unregistered pay-as-you-go phones, safety deposit boxes and payments in kind to disguise their illegal activity. The prosecution claimed that they gave themselves nicknames (‘Fruit’ and ‘Nob’ in the case of Mr Dodgson and Mr Hind) to conceal identities and met in Indian restaurants to exchange cash filled envelopes.

Defence lawyers had argued that the evidence was a result of coincidences from the tight-knit world of the City of London or steps to conceal their activities from their employers. The jury however finally convicted Mr Dodgson and Mr Hind of the five defendants on a majority of 10:2. The other three defendants; Andrew “Grant” Harrison who had worked for Panmure Gordon and private share traders, Benjamin Anderson and Iraj Parvizi, were all acquitted.

The eight year investigation and four month trial had cost a total of some £14 million and the FCA stated that the action had paid off. The costs had been incurred through a combination of permanent and non-permanent staff which at times was up to 40 people including staff who analysed the content of mobile phones found in the defendant’s possession.

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