Bloomberg News

Ex-AKO Trader Must Pay $421,000 After Guilty Plea

June 22, 2010

A former trader at AKO Capital LLP, a London hedge fund, must pay about 287,000 pounds ($421,000) in fines and restitution after being the first person to plead guilty to U.K. insider-trading charges.

Anjam Ahmad, 39, was sentenced at a London court today for conspiracy to commit insider dealing related to as many as 22 different companies in 2009, in a case brought by the U.K. Financial Services Authority. Judge Geoffrey Rivlin suspended his sentence and Ahmad will serve no jail time.

“You cooperated immediately with the authorities and were very frank about the part you played in all this,” Rivlin said at the sentencing hearing.

The FSA’s enforcement unit, which never prosecuted a case of insider trading before January 2008, may become part of an economic crime agency in two years, the coalition government has said. The FSA has won three of the four insider-trading prosecutions it has brought to trial after complaints it did little to stop the crime.

Ahmad admitted to passing information on AKO’s block trades to a co-conspirator who placed spread bets before the hedge fund’s trades, FSA prosecutor Sarah Clarke said.

Ahmad approached the FSA in February, seven days after his arrest, to cooperate, the prosecutor said.

‘Hard to Prove’

“This type of offense is enormously hard to prove,” Ahmad’s lawyer, Vivienne Tanchel, said at the hearing. Ahmad informed the FSA of “the timing, the nature and the type of agreement in place.”

AKO Capital, where Ahmad worked until September, hasn’t been accused of wrongdoing. Ahmad was an investment adviser at Citigroup Inc.’s London unit until 2007, according to the FSA register.

Ahmad was one of three men arrested in January after searches at four London addresses. One of those men has been cleared of wrongdoing based on Ahmad’s cooperation, Clarke said.

“This is the first time that we have used our powers” to enter “into an agreement with a co-operating defendant,” said Margaret Cole, director of enforcement and financial crime at the FSA. “Ahmad’s decision to co-operate with the FSA has resulted in a significant reduction to his sentence. This may encourage others to provide the FSA with information that could assist in the investigation and prosecution of suspected cases of insider dealing and market abuse.”

Ahmad was ordered to pay back the 106,000 pounds he made from the scheme and a 50,000 fine. The FSA fined him 131,000 pounds separately for pushing trades to an equity broker and receiving commission in return while he was at AKO. He must also serve 300 hours in community service.

In the insider-trading case, Ahmad was told he would receive 40 percent of the profit from his accomplice, who he communicated with using unregistered mobile phone SIM cards, Clarke said. Ahmad believed the total profit of the scheme was 265,700 pounds, when the actual profit was 590,000, the FSA said.

To contact the reporter for this story: Lindsay Fortado in London at lfortado@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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