Regulation  

Ex-Deutsche Bank director found guilty of insider dealing

Ex-Deutsche Bank director found guilty of insider dealing

A senior investment banker and a Chartered accountant have been convicted of conspiring in insider deal between November 2006 and March 2010.

In a case brought by the Financial Conduct Authority, and following a three-month trial at Southwark Crown Court, Martyn Dodgson and Andrew Hind were found guilty.

Three other defendants - Andrew Grant Harrison, Ben Anderson and Iraj Parvizi - have been acquitted.

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Sentencing will take place on a date to be fixed, while confiscation proceedings will also be pursued against both defendants.

Mr Dodgson worked at Morgan Stanley as a vice president in global capital markets until January 2007, 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.

He was Financial Services Authority approved throughout the period.

Mr Hind was a businessman, a property developer and a qualified Chartered accountant.

Mark Steward, director of enforcement and market oversight, said it was an “extraordinary and complex case” of a type not prosecuted in this country before.

Mr Steward said: “The message is loud and clear that the FCA will not tolerate sophisticated predatory criminals abusing our markets.

“This case demonstrates our capability and determination to root out this kind of abuse and ensure our market and the investing public are properly protected.”

Mr Steward added Mr Dodgson was an experienced and well-paid banker, well aware that what he was doing constituted a criminal offence, and who conspired with Mr Hind to profit at the expense of the investing public.

The pair were described as close personal friends, who agreed to deal secretly, sometimes on the basis of inside information.

Mr Dodgson sourced this 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 this information to Mr Hind who acted as a ‘middle man’ and effected secret dealing for their benefit.

The FCA described “elaborate strategies” they designed to prevent the authorities from uncovering such activities, including 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 five acts of dealing related to the following companies:

Scottish & Newcastle in October 2007;

Paragon Group of Companies in July 2008;

Just Retirement in October 2008;

Legal & General in February 2009; and

BSkyB in March 2010.

Code-named Operation Tabernula, the regulator’s investigation was conducted in partnership with the National Crime Agency and took on forensic accountants, lawyers, markets experts, intelligence analysts and digital forensic specialists to unravel the conspiracy.

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