R v Manjeet Mohal and Reshim Birk (Criminal Insider Dealing Case)

Posted on 23/01/2017 · Posted in Uncategorized

In a sentence handed down by HHJ Cooke QC in the Central Criminal Court in London on 13th January 2017, former Logica business analyst Manjeet Singh Mohal and his neighbour Resham Birk found themselves in deep waters for charges of insider trading in the British IT and management consultancy’s takeover by CGI Group Holdings Europe Limited, a subsidiary of the Canadian IT giant CGI Group, in 2012.

If companies tell us more, insider trading will be worth less.”
James Surowiecki

Investigation by Financial Conduct Authority (FCA) uncovered that being a member of the Finance Team at Logica, Mr. Mohal was privy to a lot of classified information regarding the upcoming takeover negotiations, which he had passed on to his neighbour Mr. Birk. The latter then used those information in buying £20,000 Logica shares and £5,000 options through his stockbroker at Investec, citing a “hunch” about a possible takeover. The public announcement about the takeover came three days later, prompting Logica’s share price to escalate from 65.7 pence to 110 pence, and Mr. Birk was found to make profits in excess of £100,000. Following a warning of illegal activity from the broker, it was Investec who filed a suspicious transaction report the next day, triggering the subsequent FCA probe.

On trial, Mr. Mohal pleaded guilty to two counts of insider trading whereas Mr. Birk pleaded guilty to one count. No evidence was found against Surinder Sappal, the brother-in-law of Mr. Birk who allegedly used Mr. Mohal’s tip-off to buy Logica shares at the same time.

Mr. Mohal was then handed a 10-month sentence suspended for two years along with an order to undertake 180 hours of community service. Mr. Birk received a 16-month sentence suspended for two years, an order to undertake 200 hours of community work, as well as a confiscation order of £162,876.69. Additionally, both Defendants were ordered to pay costs of £42,593.35.

Interestingly, this was the second time insider trading allegations came to light regarding the Logica-CGI takeover deal. Last year Ryan Wilmott, former senior manager of Logica was also found guilty of insider trading and was sentenced to 10 months imprisonment, whereas his friend Kenneth Carver was ordered a fine of £35,212.

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