Following successful prosecutions for insider dealing which culminated in 2019, the FCA has obtained significant confiscation orders in England against the two former financial services professionals.
Background
A compliance officer at the London branch of a Swiss multinational investment company and her family friend were charged in June 2017 with insider dealing offences which took place between 13 June 2013 and 19 June 2014.
Insider dealing convictions
In June 2019, both defendants were convicted following evidence that one defendant, a compliance officer, had used her position to identify inside information which she passed to her co-defendant, a family friend and experienced day trader of financial securities, who made a profit of approximately £1.4 million from the insider dealing.
In sentencing, the judge noted that the compliance officer had committed a gross breach of trust which would have an adverse impact on the reputation of her employer and that she had been instrumental to the insider trading. The fact that the compliance officer's profit from the insider dealing did not approach the level of her co-defendant did not mean that she should receive a lesser sentence. Both were sentenced to 3 years imprisonment.
The confiscation orders
Following the criminal proceedings, the FCA brought confiscation proceedings against both defendants with the compliance officer ordered to pay £34,194.53 and her co-defendant, £3,893,962.82. This sum reflects the profit from the insider trading and other trading, which the court is also entitled to regard as proceeds of crime. In addition, the co-defendant was ordered to pay the FCA's costs of £403,552.
Commentary
These prosecutions represent a significant success for the FCA. The large sums confiscated demonstrate that the FCA has the appetite to prosecute insider trading and also pursue insider traders for financial recovery. That these confiscation proceedings were pursued and concluded during 2020/2021 is a strong signal that the FCA is continuing to take a robust approach to its enforcement activities during the COVID-19 pandemic. Its success is timely as the opportunities and temptations to commit insider trading will likely have increased during the crisis. We will continue to provide updates on the FCA's enforcement activity in the coming weeks and months.
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