A UK court sentenced a man to jail for 27 months for insider trading in shares of the waste company he worked for, the latest victory in a campaign against the practice by Britain's financial watchdog. The prison term, half of which was suspended, was the longest to date for insider dealing in Britain.
Britain's Financial Service Authority (FSA), blamed for failing to curb market abuse in the wake of Britain's worst financial crisis, has redoubled its efforts to clamp down on insider dealing, with 10 criminal convictions secured so far and 12 trials still pending.
Earlier this month, the FSA claimed its highest profile victory when a former Dresdner banker and his Singaporean wife pleaded guilty to being members of a nine-year insider dealing scam. Manufacturing manager Neil Rollins wept as judge James Wadsworth handed out the sentence in a London court.
"You sold when you knew it was folly to buy. Every pound you saved was a pound someone else spent," Wadsworth said. "By selling early you broke the trust of your employer, you broke the trust owed to the market." Rollins, 46, who worked at PM Onboard Ltd, a refuse truck maker later taken over by Vishay, had already been found guilty of insider dealing and money laundering by Southwark Crown Court in November.
It was the first time a court allowed the FSA to prosecute somebody for money laundering. In August 2006, Rollins became aware of PM Group's worsening financial situation and sold his entire shareholding during a closed period, to preserve his pension fund. He also persuaded his wife his wife to sell her shares, the FSA said.
When the group announced poor results on September 19, its share price plunged 17 percent, which would have amounted to a loss of about 45,000 pounds ($71,550) for Rollins. With the share price still falling on the second day, the couple avoided a total loss of 75,000 pounds, the FSA said. Rollins will serve at least 13 and a half months in jail and was ordered to pay almost 200,000 pounds in confiscation.
"There is a growing will not only by the FSA to dispel the previous view held by some in the City that the FSA was "a light touch regulator" but also by the public to make examples of such people," Abbas Lakha, a lawyer who has been advising in several insider dealing cases, said.