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Home > Regulation > UK Regulation

Former IFA one of six imprisoned for insider trading

Six men have been imprisoned for a total of 16 years after being found guilty of insider dealing offences in the FSA’s longest ever market abuse prosecution.

By Kevin White | Published Jul 27, 2012 | comments

Ali Mustafa, Paresh Shah, Pardip Saini, Bijal Shah, Truptesh Patel and Neten Shah were sentenced at Southwark Crown Court today (27 July) after a four-month trial for offences relating to insider dealing between 2006 and 2008.

Paresh Shah a former IFA at North London-based Elite Financial Planning, Ali Mustafa and Pardip Saini were each sentenced to three and a half years in prison. Truptesh Patel and Bijal Shah were sentenced to two years in prison, while Neten Shah, a chartered accountant, was sentenced to 18 months in prison.

An FSA spokesman said Paresh Shah was deauthorised as an IFA in 2008, and was still trading as an adviser when he was arrested the same year.

Ali Mustafa, who worked as a print room assistant at UBS, obtained confidential and price-sensitive information from investment documents concerning proposed or forthcoming takeover bids.

He then disseminated the information among the group who used accounts to place spread bets ahead of the announcements, knowing that when the information became public knowledge the price would rise.

His brother Ersin Mustafa, was also accused of involvement in the scam but the court was told that he was believed to have fled to Northern Cyprus.

The defendants were convicted of making a combined profit of £732,044.59 on trading between 1 May 2006 and 31 May 2008.

Delivering the sentencing, his honour judge Pegden QC, stated the fraud was not a victimless crime and had been carefully planned and talked about before, during and after the FSA investigation, and that the sentencing should be seen as a deterrent.

He said: “The insider dealing in this case was not isolated criminal behaviour. The meticulous and exhaustive FSA inquiry has revealed exactly how your cheating was perpetrated.”

He added that the group had “betrayed the principles of trust and confidence in the markets, and had inevitably undermined public confidence in the markets”.

All six will have to serve at least 50 per cent of their respective sentences before being considered for release on license.

The FSA case involved examining 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.

Another defendant, Mitesh Shah was acquitted of insider dealing.

Tracey McDermott, acting director of the FSA’s enforcement and financial crime division, said: “This is another significant milestone in our fight against insider dealing. It demonstrates that we can successfully present the issues in a long and complex case so that a jury understands them and has the confidence to convict criminals involved in insider dealing rings.

“They thought that by attempting to cover their tracks they would get away with their criminal conduct. This investigation and these sentences should send a clear message to anyone else who might be tempted to do the same. Insider dealers are criminals, no more and no less, and we are committed to using all the tools at our disposal to bring them to justice.”

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