RegulationMay 11 2018

Insider dealers told to repay £1.69m

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Insider dealers told to repay £1.69m

Two men convicted of insider dealing have been told to pay back £1.69m in the next three months for face longer jail terms.

Martyn Dodgson and Andrew Hind were convicted in May 2016 following a three-month trial for insider trading relating to five stocks.

Today (11 May) Judge Pegden at Southwark Crown Court made confiscation orders in the sum of £1,074,236 against Dodgson and £624,521 against Mr Hind.

While the pair were convicted in relation to five stocks, the total amounts to be confiscated include profits generated from trading in a further 23 stocks, which the Financial Conduct Authority asserted amounted to insider dealing.

As both defendants are deemed to have a criminal lifestyle due to the extent of their offending, the court was able to assume the profits made from other trading within a defined period also represented the proceeds of insider dealing and therefore their benefit from general criminal conduct.

Mark Steward, the FCA’s executive director of enforcement and market oversight, said: "Mr Dodgson and Mr Hind hatched an audacious plan to make significant illegal gains for themselves. They were driven by greed and self-interest, but through their actions they have lost their liberty, their livelihoods and their reputations.

"Insider dealing is a serious crime that undermines our markets. The FCA will continue to ensure that those engaged in such activity are held to account for their misconduct."

Dodgson was sentenced to four-and-a-half years’ imprisonment and Hind to three-and-a-half years’ imprisonment.

Their conviction related to a conspiracy which operated between November 2006 and March 2010, during which time Mr Dodgson held senior positions at Morgan Stanley, Lehman Brothers and Deutsche Bank.

He used those positions to source inside information, which he passed on to his close friend, Hind, who in turn caused trades to be placed for the benefit of both defendants.

The pair employed elaborate strategies to prevent the authorities from uncovering their activities, including the use of unregistered mobile telephones, safety deposit boxes, and encoded and encrypted records. They also used multifarious methods to distribute the benefit they obtained from their criminal enterprise.

The FCA said the pair's "meticulous record keeping" ultimately proved to be their downfall in the confiscation proceedings because those records detailed trading in a variety of stocks and the amounts that each was to benefit as a result.

This made it easier for the FCA to demonstrate the full extent of each defendant’s benefit from their criminal conduct.

damian.fantato@ft.com