Operation Tabernula, which has been widely reported, was the UK’s largest and most complex insider dealing prosecution. The FCA allegation involved a group of people who were party to dealing on inside information, from employees at investment banks to intermediaries and private traders.
Records found at one of the defendant’s offices recorded 59 instances of trading, which the FCA said occurred in connection with the agreement to deal on inside information. They sought to prove on over 80% of occasions when trading took place, the investment bankers were employed to advise the companies whose stocks were traded. However the FCA relied on just six ‘overt’ acts of ‘insider dealing’, between November 2006 and March 2010, in different sectors of the market.
Peter Hughman (Lead Partner, Crime Department) acted for Mr Parvizi. He was assisted by Katie Kipps (Solicitor, Crime Department) and other members of the team. In addition to the extensive material gathered by Hughmans to support the defence, the team analysed hundreds of thousands of trading data entries, over 120 trading accounts, call data records, broker call recordings, hours of probe recordings, as well as over 46 lever arch files of evidence and some 80,000 items of unused material.
The 8 year investigation was branded a success by the FCA, but after a trial that lasted 12 weeks, they failed to secure convictions with respect to a number of defendants. After 11 days of deliberation by the jury, two defendants were found guilty of conspiracy to engage in insider dealing. Mr Parvizi and two others were acquitted. The two convicted defendants were sentenced to four and a half years and three and a half years. The maximum sentence for insider dealing in the UK is seven years imprisonment and/or an unlimited fine.
The FCA conducted the £14 million investigation, in partnership with the National Crime Agency (‘NCA’). The FCA were eager to point out that it is funded by the firms it regulates. It does not receive any funding from the Government. However the NCA, who assisted with the lengthy surveillance against the defendants, is publically funded.
The final cost to the public purse is unknown, but includes legal fees with respect to a number of publicly funded defendants and the cost of a 12 week jury trial, which is likely to be substantial.
The defendants who were acquitted and did not rely on public funds to defend themselves, throughout the 8 year investigation, are not entitled to any form of compensation or even the return of their legal costs.
Mr Parvizi put his case to investigators over 6 years ago, when he was arrested in March 2010, and provided a comprehensive prepared statement which set out the same defence that he explained to the jury throughout his trial.
Counsel instructed were Orlando Pownall QC and David Whittaker of 2 Hare Court.