Former Hedge Fund Trader found Guilty in Spread Betting Scam
June 22, 2010Peter No Comments »A former hedge fund trader from South London who made use of inside information to assist him in making than £500,000 from a friend’s financial spread betting scam has been found guilty but will not serve time.
Anjam Ahmad, 39, of Smugglers Way, Wandsworth, was given a 10-month jail sentence, suspended to two years, after he cooperated with prosecutors by unveiling his criminal conduct and the systems behind the conspiracy.
Judge Geoffrey Rivlin QC, the Honorary Recorder of Westminster, declared to Ahmad: ‘All that you have admitted has resulted in your temporary ruin.’ Anjam Ahmad, who was employed at AKO Capital at the time up to September 2009 has been ordered to pay a £50,000 fine and will also have to pay back the £106,285 gains he personally made from his criminal activities. The rest of the £500,000 went to a third party who cannot be named at this stage for legal reasons.
The former hedge fund trader will also have to provide 300 hours of community work and pay a £15 victim surcharge, and will also be fined more than £130,000 by regulators, the FSA’s Southwark Crown Court in central London was told.
The judge pointed out that Ahmad was a man of excellent character and in effect remarked ‘You are a man with a very great deal to offer, a man who I accept does not come under the category that sometimes one thinks of as a so-called city slicker. Not a man who lived the high life, nor a man who, so far as this particular case is concerned, has actually gained financially as a result of his activities. Behaviour of this kind was very much out of character.’
‘His punishment would however have been even heavier had he not pleaded guilty and agreed to cooperate’, Director of enforcement Margaret Cole was quoted as saying. ‘That sends some very strong messages that it’s definitely worthwhile cooperating with the regulator in insider trading,’ Cole said.
It appears that Ahmad made use of insider information which he acquired during the course of his work activities as a securities trader and risk manager with AKO Capital to come up with the financial spread betting operation with a friend who had found himself in debt. Ahmad provided his friend with information on AKO Capital’s activities in return for a 40% share of the profits from his friend’s financial spread betting dealings, the court was told. Apparently AKO traded in large quantities of shares and thus AKO Capital’s dealings alone could move the share prices of the companies involved. The arrangement consisted of Ahmad telling his friends which shares AKO was interested in after which the former hedge fund trader manipulated its dealings to make sure AKO bought in big quantities to ensure a rise in the affected companies’ share prices and usually translating into a gain.
Ahmad believed that the total profit of the scam amounted to £270,000, of which his share amounted to £106,285, but it appears that his friend was hiding from him information as to the extent of gains made as the insider dealing resulted in total gains of £590,000. After the police searched Ahmad’s home in the beginning of this year, they ended up finding gold bars worth some £20,000 and a bag containing £100,000 cash in a cabinet.
Ahmad admitted conspiring to commit insider dealing and has also requested for a charge of insider dealing in February 2008, of which the Financial Service Authority was previously unaware, to be taken into consideration.
Comments: Probably, a sign of more things to come. The Financial Services Authority has been trying to crack down on insider trading at hedge funds in particular for quite sometime now. Five individuals were sentenced to prison last year and record fines of more than 30m pounds were levied. Moreover, it has levied more fines in 2010 so far than in the whole of 2009.
Tags: scam, spread betting
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