FSA prosecutes six British Asians for insider dealing

Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah, and Truptesh Patel were convicted of making a combined profit of £732,044.59 on trading between 1 May 2006 and 31 May 2008. They were arrested following a four and a half month trial at the Southwark Crown Court.

The defendants obtained confidential and price-sensitive information from investment banks concerning proposed or forthcoming takeover bids. They then used a large number of accounts to place spread bets ahead of those announcements knowing that when the information became public knowledge, the price would rise.  

“It was a sophisticated and complex attempt to deal on inside information over a long period,” the UK’s Financial Services Authority (FSA) has said.

One British Asian, Mitesh Shah, was acquitted of insider dealing.

The regulator said the complex prosecution involved examining many hundreds of trading accounts and telephone records, to build up a picture of the timing and degree of contact between those in the insider dealing ring.

“The defendants were involved in a long running, sophisticated and very profitable scheme,” said  Tracey McDermott, acting director of Enforcement and Financial Crime division.

Many of the defendants derived the majority of their income from the scheme, McDermott said. They took a number of steps to reduce the likelihood of detection and continued, throughout the trial, to deny any wrongdoing.

“This sort of behaviour poses a significant risk to the integrity of markets and cheats honest investors,” she said.

“The conduct of the individuals in this case and the details of the scheme are important reminders that firms need to protect inside information throughout its life so that it cannot be misused,” McDermott warned.

The six defendants were convicted of offences of disclosure of inside information and dealing whilst in possession of it in respect of six companies stocks.

Ali Mustafa was found guilty in respect of Reuters and Vega stocks; Neten Shah was found guilty in respect of Vega; and Pardip Saini, Paresh Shah, Bijal Shah and Truptesh Patel in respect of Reuters, Biffa, Premier Oil and Enodis, and Vega.  Additionally, all, except Truptesh Patel, were found guilty in respect of Thus.

The FSA has previously secured 14 convictions in relation to insider dealing between March 2009 and May 2012.

It is currently prosecuting four other individuals for insider dealing. The Financial Services and Markets Act 2000 gives the FSA authority to investigate and prosecute insider dealing.