In a case brought by the Financial Conduct Authority (FCA) and heard at South London’s Southwark Crown Court, confiscation orders totalling £3,249,488.71 were made by His Honour Judge Pegden QC between September 10, 2014 and September 15, 2014 against Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah, Truptesh Patel and Richard Joseph.
On July 27, 2012 Ali Mustafa, Pardip Saini and Paresh Shah were sentenced to 3 years 6 months imprisonment, Neten Shah was sentenced to 18 months, and Bijal Shah and Truptesh Patel were sentenced to 2 years for offences relating to Insider Dealing contrary to Part V of the Criminal Justice Act 1993. These defendants were convicted of making a combined profit of £732,044.59 on trading between May 1, 2006 and May 31, 2008.
On March 29, 2013 Richard Joseph was sentenced to 4 years imprisonment for Insider Dealing offences. Mr Joseph’s trading resulted in a net profit of £591,117 on trading between September 2007 and July 2008.
The total amount confiscated is substantial and whilst the British authorities are not known for issuing such vast sums as their counterparts on the other side of the Atlantic, this penalty exceeds the profits generated as a result of the application of the confiscation regime which allows the court, in appropriate cases, to assume that the profits from other trading that took place within the same period represent the proceeds of crime.
This represents a relatively rare outcome, compared with the plethora of cases which reach court in North America, brought by the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) against transgressors, which more often than not end in severe penalties handed out by judiciary. Most complaints brought to by the FCA in Britain are settled before any action is taken, as reported by LeapRate last week.
Further to the actual decision, Richard Joseph and Neten Shah were also ordered to pay a costs order of £200,000 and £100,000 respectively.
Tracey McDermott, director of Enforcement and Financial Crime said: “The FCA has made it clear that we will use all of the tools at our disposal to ensure that our markets are clean. These individuals engaged in a sophisticated scheme to try and make easy money by exploiting inside information As a result they have not only lost their liberty, their livelihoods and their reputations but they have also now been ordered to pay significant sums in confiscation. This should be a clear message to others that insider dealing does not pay.”
The following Orders were made and must be paid over the course of the next 6 months:
To read the full announcement from the FCA, click here.