Three leading City financiers were arrested yesterday on suspicion of making hundreds of thousand of pounds through insider dealing
In an unprecedented crackdown on ‘market abuse’, three other people were also held during raids on 16 homes and businesses. One of the suspects was named last night as Julian Rifat, 41, who works for Moore Capital, one of the world’s biggest hedge funds.
The £10billion fund, based in New York but with an office in Mayfair, takes high-risk bets on currency and debt markets around the globe. Mr Rifat is understood to be a a middle-ranking executive whose job is to buy and sell shares as the fund’s financiers decide.
The second City figure works for the German financial giant Deutsche Bank, which employs more than 8,000 people in the Square Mile, and the third is with broker Exane BNP Paribas, which is half owned by French banking giant BNP Paribas. It is claimed the City workers passed inside information about forthcoming deals to traders, both directly and via middlemen.
Typically, traders take advantage of inside information by buying shares before the announcement of a deal sends their price rocketing. They then reap massive profits by selling the stock.
The Financial Services Authority-which led yesterday’s operation, said it was the largest of its kind to target suspected insider traders. More than 140 investigators from the FSA and the Serious Organised Crime Agency took part in the raids in London, the South East and Oxfordshire.
Computers, mobile phones and documents were being examined last night as investigators questioned the suspects, some of whom are said to earn seven-figure salaries. Suspicions over transactions involving the six men were first raised in late 2007.
The move was the latest chapter in a crackdown on insider trading by the City regulator. They were the fifth set of arrests to take place since 2008 and the watchdog has secured five jail terms for financiers convicted of insider trading.
Three further cases are working their way through the criminal justice system. Last March Christopher McQuoid, a solicitor, and his father-in-law James Melbourne were found guilty of insider dealing in the first such prosecution under the FSA’s tougher approach.
The jury found that McQuoid, 40, had passed inside information to his father-in-law in 2006 and that Melbourne, 75, used it to make a profit of almost £49,000.
Three months later he gave McQuoid a cheque for exactly half the cash he had made. McQuoid was jailed for eight months. His father-in-law received the same sentence but it was suspended for a year, partly because of his age.
The FSA also obtained a court order freezing the profits from the trade. Earlier this month, Malcolm Calvert, a former equities marketmaker at stockbroker Cazenove, was sentenced to 21 months in jail for insider dealing. Calvert, 65, was found guilty over deals which made him a profit of more than £100,000. A confiscation and costs hearing will take place on April 23.