Four men and one woman linked to defunct UK specialist brokerage Blue Index Ltd have been charged with 17 counts of insider dealing. The individuals, which include two former directors and one former senior trader of Blue Index Limited, a specialist CFD brokerage, have all been charged by the UK Financial Services Authority, or FSA, with insider dealing by the U.K. Financial Services Authority over claims they traded before seven merger announcements and will appear in court next month.
The charges relate to arrests made May 27, 2009, when Britain’s Financial Services Authority stopped trading at Blue Index Ltd, a high-profile contracts for difference (CFD) brokerage just days after it was raided by police.
James Sanders, the CFD brokerage’s co-founder, and his wife Miranda Sanders are among those charged with 17 counts of alleged insider dealing. The married couple have been charged with allegedly trading ahead of seven takeover announcements between October 2006 and February 2008. Mr Sanders was also charged with allegedly disclosing insider information.
Both Mr Sanders and Christopher Hossain, a trader, also stand accused of encouraging Blue Index’s clients to trade CFDs in relation to two takeover stocks. Others to face charges include Mr Sanders’ fellow co-founder James Swallow and former Blue Index employee Adam Buck.
While news of the allegations was released on Thursday, the FSA arrested the five suspects on May 27 last year, at the same time as closing down Blue Index’s operations.
- James Paul Sanders, co-owner and a director of CFD advisory brokerage company Blue Index, as well as his wife Miranda Sanders have been jointly charged with seven offences in relation to insider dealing connected to advance dealing of seven separate takeover announcements.
- James Paul Sanders has been separately charged with three offences in relation to disclosing inside information in breach of section 52 of the Criminal Justice Act 1993.
- James Paul Sanders as well as Christopher Hossain, a senior dealer of Blue Index, have been charged with offences of trying to convince clients of the firm to trade CFDs in relation to two of the stocks.
- Christopher Hossain has also been charged with a further offence of insider dealing ahead of a takeover announcement.
- James Swallow, co-owner and a director of Blue Index has been charged with three offences of insider dealing relating to his trading ahead of three separate takeover announcements.
- Adam Buck, a former employee of Blue Index and close associate of James Paul Sanders, has been charged with one offence of insider dealing relating to his trading ahead of a takeover announcement.
- The offences are all alleged to have taken place between Oct 2006 and Feb 2008 and all five individuals have been bailed by City of London Police to appear at City of Westminster Magistrates Court on Dec 20.
- The FSA arrested the suspects in May 2009 while simultaneously preventing Blue Index from continuing to trade.
The Sanders ”completely deny each and every one of the allegations and have explained at length to the FSA why they make those denials,’ their lawyer, Kevin Robinson at the law firm Irwin Mitchell LLP, said today.
David Corker, a lawyer for Swallow, and Jill Lorimer, Hossain’s attorney, declined to comment.
Katie Wheatley, a lawyer for Buck at Bindmans LLP, said he ‘looks forward to clearing his name in court.’
‘Adam Buck is completely innocent of this charge and we regret that it has been brought,’ Wheatley stated in an e-mail.’He has cooperated with the Financial Services Authority during their investigation of this case and he strictly denies the allegation made against him.’
Blue Index was a leading advisory brokerage in CFDs, where investors put forward small initial deposit that can yield high returns but also risk potentially large losses. It made a pre-tax profit of £123,000 in the year to September 2008 on turnover of just less than £2.3m, according to Companies House records.
All five individuals have been bailed by the City of London police and will return to Westminster magistrates court December 20.
The FSA has been intensifying its action against insider dealing recently and is presently prosecuting 11 other individuals for insider dealing. In the past year, the FSA has secured a series of convictions for the offence, most recently with the imprisonment of former Cazenove partner Malcolm Calvert.