An insider dealing ring that made £7.4m from trading in just six stock market companies used burner phones, offshore companies, code names and encrypted memory sticks to mask their crimes, a court was told on Thursday.
The conspiracy started to unravel after the Belgravia offices of the veteran trader Ben Anderson, 71, were bugged by City regulators, prosecutors said.
Mark Ellison QC told a jury at Southwark crown court that investigators had been able to trace the extensive trading activities of Anderson and his sometime partner, Iraj Parvizi, through a middle man, Andrew Hind, and back to two senior City bankers regularly in possession of price-sensitive information.
It was one of the most sophisticated insider dealing rings ever discovered in the UK, the Financial Conduct Authority believes. Anderson, Parvizi and Hind, together with Martyn Dodgson, a former corporate broker for Deutsche Bank, and Grant Harrison, a former broker for broker Panmure Gordon, all plead not guilty to charges of conspiracy to insider deal between 2006 and 2010.
When he was arrested six years ago, Dodgson, who earned £601,000 as a managing director at Deutsche Bank, told police he had never had any involvement in share trading or spread betting on shares. Prosecuting counsel told the court that he had also said “he would not dare to advise anyone on trading or spread betting as it was too easy to lose a lot of money”.
On his keyring, investigators found a key that opened a secure metal box kept at his Hampstead home, which contained an a specialist encrypted flash drive that allows users to store files and browse the internet without leaving a trace or an IP address. Dodgson said he had not used the stick in years and could not unlock it. By cross-checking other passwords the banker had used elsewhere, however, investigators where able to discover the drive was opened by the password “Lamborghini55”.
On it, Ellison told the court, was found incriminating evidence, including a spreadsheet investigators had been able to open after trying another of his well-used passwords, “Maserati”.
Dodgson confirmed Hind was a close friend and that the two men spoke three or four times a week. If they ever discussed Dodgson’s work in passing, the banker told police, it would never concern trading. He had not known Hind was in the habit of making spread bets.
Investigators discovered Hind had bought six encrypted USB sticks, with three being found in a wall safe at his home. When asked for the passwords, he declined to provide them. Investigators have been unable to access the sticks.
Hind is said to have used unregistered pay-as-you-go mobile phones – often known as burners – to communicate with Anderson and Parvizi. The two traders, who referred to Hind as “Nobu”, were already extremely active spread betters so insider trading carried out under cover of their day-to-day dealings was unlikely to ring alarm bells among City regulators, Ellison said.
Anderson and Parvizi admit adding their own funds to investments carried out on behalf of Hind, but both insist they had no reason to suspect Hind’s stock picks were based on price-sensitive insider information.
In a bugged conversation at Anderson’s office, Ellison told the jury the trader was on one occasion recorded saying: “If he was ever pulled in, he would deny he ever knew Nobu.”
The proceeds of , Ellison said, were distributed through offshore companies and foreign bank accounts. In some instances invoices were submitted for services other than trading, or gains were disbursed through cash handovers or payments-in-kind.
Hind had given Parvizi an unregistered SIM-card for his phone and, when the two spoke, they referred to one another as “Nobu” and “Fatty”.
The case continues.
This article was written by Simon Bowers, for theguardian.com on Thursday 14th January 2016 18.22 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010