Ex-Moore Capital trader jailed and fined £100k for insider dealing

Former Moore Capital trader Julian Rifat has been sentenced to 19 months in prison after pleading guilty to insider dealing.

He has also been fined £100,000 and ordered to pay costs of £159,402.

Rifat is the third individual to plead guilty to insider dealing offences arising out of Operation Tabernula, the FCA’s largest and most complex insider dealing investigation.

His sentencing means details of two previous convictions can now be reported.

Former Legal & General Investment Management senior equities trader Paul Milson pleaded guilty to insider dealing offences and was sentenced to two years in prison in March 2013.

Former Novum Securities broker Graeme Shelley also pleaded guilty and was handed a two-year suspended sentence in March 2014.

Rifat and Milsom both passed confidential information to Shelley about upcoming trades via unregistered pay-as-you-go phones.

Shelley used the information to make trades and shared the profits with the pair. Milsom and Shelley made £500,000 between them, while Rifat and Shelley made £285,000 between them.

Shelley withdrew as much as £10,000 at a time from his bank and handed it to Rifat and Milsom in London City pubs.

He also paid for a £48,500 new Range Rover and a £15,000 luxury family holiday to Oman for Rifat.

The FCA first discovered the link between the three men when a raid on Shelley’s home uncovered four pages of handwritten notes inside a jacket pocket.

The notes were headed ‘JR’ and ‘MP’ and contained lists of trades, as well as dates and figures under the heading ‘paid’.

FCA acting director of enforcement and market oversight Georgina Philippou says: “It is very rare in investigations of this nature to have pieces of paper that prove the case.”

A team of around 30 experts at the FCA analysed 10 million items of evidence to build a case which proved the link between Shelley’s trading and Rifat receiving confidential information, as well as the link between Shelley’s trades and the L&G equity dealing desk receiving orders to trade UK stock.

The evidence included more than 100,000 lines of trading data and 10 million items of electronic communications.

Operation Tabernula case manager Ken O’Donnell says: ”The case team went through that methodically, slowly piecing together the chronologies. It is painstaking and there are no short cuts.”

Evidence gathered by the FCA includes an email from Shelley to his bank on 26 February 2009 to say he would be withdrawing £10,000, on the same day that he arranged to meet Milsom for a drink at the Rack and Tenter.

Shelley’s notes also recorded the figure £9,500 next to the date 26 February.

Also uncovered was an email from Rifat to Trailfinders to say Shelley would be paying for his holiday to Oman. The amount and date also corresponded to Shelley’s notes.

In a sentence hearing at Southwark Crown Court last week, Judge McCreath said Rifat had acted “deliberately and dishonestly” but gave him credit for his guilty plea.

Philippou says: “Mr Rifat was a very experienced market professional. He was privy to highly sensitive information at the heart of some of the largest transactions in the UK financial markets during the latter half of 2009.

“Mr Rifat’s behaviour exploited financial markets during a particularly challenging time just as they were taking steps to recover from the 2008 crisis. The smooth running of our financial markets requires market professionals to play by the rules – Mr Rifat knew the rules, but he abused them for his own benefit.”

Six further individuals linked to Operation Tabernula face trial in January.

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