May 12, 2016 / 1:36 PM / 4 years ago

Ex-Deutsche banker and accountant jailed for insider dealing

LONDON (Reuters) - A former Deutsche Bank managing director was sentenced to four and a half years in jail for insider dealing by a London court on Thursday, the longest prison term handed down in Britain for the crime to date.

After an unprecedented eight-and-a-half year investigation by the Financial Conduct Authority (FCA), Martyn Dodgson, 44, who advised the government during the global financial crisis, was jailed alongside his accountant friend Andrew Hind.

Hind, 56, a former finance director at fashion chain Top Shop, was sentenced to three and a half years after both were convicted on Monday for their part in a scam prosecutors said made more than $10 million (7 million pounds) from November 2006 to March 2010.

“This was persistent, prolonged and deliberate dishonest behaviour,” Judge Jeffrey Pegden said.

The sentences draw a line under Operation Tabernula, an FCA investigation launched after two day traders brought attention to themselves in 2007 by attacking Scottish & Newcastle shares in what the FCA called “no holds barred, high-risk trading”.

Three years later, police raids and arrests linked to the investigation sent shockwaves through the City of London. The case culminated in three guilty pleas, followed by two convictions and three acquittals after a near four-month trial.

The FCA alleged Dodgson sourced inside information from within the banks where he worked, passed the tips onto middleman Hind, who then asked day traders to deal on his behalf. The men would split the profits, often using cash or payments in kind.

The two traders who first caught the FCA’s attention were Iraj Parvizi, an Iranian kebab shop worker turned multi-millionaire dubbed “Mad Punter” and Belgravia-based Scotsman Ben Anderson. They were acquitted on Monday, as was former Panmure Gordon trader Andrew Grant Harrison.

All the defendants denied any wrongdoing.


Despite the split verdict, the FCA considered the result a victory. “Dodgson and Hind were at the heart of the scheme,” Therese Chambers, head of the FCA’s wholesale enforcement arm, told a briefing on Wednesday.

Sarah Wallace, a partner at law firm Irwin Mitchell, said Dodgson’s sentence paled in comparison to the lengthy prison terms handed down in the United States for securities fraud.

“However, the risk of losing your total wealth, some of which may have been amassed lawfully, through what some argue are disproportionately large confiscation orders ... can be the most painful part of the sentencing process,” she said.

The FCA said it would pursue confiscation proceedings against both men to claw back the proceeds of crime.

The defendants used unregistered pay-as-you-go cell phones and military-grade encryption devices such as waterproof IronKey USB memory sticks that self-destruct if too many incorrect passwords are entered.

Dodgson kept his USB stick in a locked red box under his bed. A hint of his password - Lamborghini55 - was eventually discovered in an email sent to his wife, the FCA case team said.

The FCA scanned more than 10 million digital items, examined 600 digital devices, listened to more than 35,000 recorded calls, investigated 500,000 lines of telecoms data and identified more than 120 trading accounts and 200,000 lines of trading data in a $20 million inquiry occupying up to 40 staff.

Editing by Rachel Armstrong and David Clarke

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