Tuesday, 22 July 2014
Last updated 1 hour ago
Oct 14 2011 | 10:00am ET
A UK regulatory compliance expert thinks convicted insider-trader Raj Rajaratnam got his just deserts when a U.S. court handed down an 11-year prison sentence on Thursday.
“The 11-year sentence for a man described as ‘the modern face of illegal insider trading’ will be welcomed by all stakeholders in the integrity of capital markets. This was not a technical offence but deliberate conduct calculated to profit from illicitly obtained company information not yet known by the market. Essentially, Rajaratnam was securing a higher exam mark than he deserved by having caught sight of some of the answers before sitting the test,” said Peter Moore, head of regulation at UK compliance consultancy The IMS Group, in a statement released Friday.
Moore believes the case is worthy of note in the UK for a number of reasons. For one, the 11-year sentence exceeds the current maximum insider-trading sentence possible in the UK by four years. Moore says the FSA’s interim managing director and former head of enforcement, Margaret Cole, has publicly requested that the maximum be raised to 10 years.
Moore also notes that while the Rajaratnam case turned on wiretap evidence, which “may not actually be admissible in a UK court,” the UK regulator had had access to mandatory voice records of traders’ calls (which must be retained for six months) since March 2009. Those rules will be extended to mobile phones next month. Moreover, the FSA’s recently enhanced trade surveillance system, ZEN, enables the FSA to detect suspicious trades which may result in the FSA contacting firms requesting that they preserve voice records beyond the six month timeframe.
The use of wiretaps to build the case against Rajaratnam is expected to be at the heart of his lawyers’ appeal of the sentence.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…