Two convicted in FCA's largest insider dealing case

The FCA said that 'Operation Tabernula' had been its largest and most complex insider dealing investigation.

The trial found that Martyn Dodgson and Andrew Hind agreed to deal secretly, sometimes on the basis of inside information which Dodgson sourced from within the investment banks at which he worked.

Dodgson worked at Morgan Stanley as a Vice President in Global Capital Markets until January 2007, and then at Lehman Brothers as an Executive Director in the European Investment Banking Division from July 2007 to September 2008. He moved to Deutsche Bank in October 2008 as a Director in the Corporate Broking Department and was later promoted to Managing Director.

The investigation found that in many cases, Dodgson was advising or connected with the company traded or the corporate transaction.

The five acts of dealing the FCA relied on to prove the conspiracy related to Scottish & Newcastle, Paragon Group of Companies, Just Retirement, Legal & General and BSkyB.

In a statement, the FCA said that "the offending in this case was highly sophisticated and took place over a number of years", with the defendants putting in place "elaborate strategies designed to prevent the authorities from uncovering their activities".

These included the use of unregistered mobile phones, encoded and encrypted records, safety deposit boxes and the transfer of benefit using cash and payments in kind.

Three other defendants were acquitted in the case, however the verdict bring the total number of convictions secured in Operation Tabernula to five.

Mark Steward, Director of Enforcement and Market Oversight, said:

“This was an extraordinary and complex case of a type not prosecuted in this country before. The message is loud and clear that the FCA will not tolerate sophisticated predatory criminals abusing our markets. This case demonstrates our capability and determination to root out this kind of abuse and ensure our market and the investing public are properly protected.

Dodgson was an experienced and well-paid banker, well aware that what he was doing constituted a criminal offence and who conspired with Hind to abuse our market and to profit at the expense of the investing public. The FCA is committed to detecting this kind of abuse and make the perpetrators fully accountable in accordance with the law.”