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December 27, 2017

Jahangir Tareen could have been jailed for insider trading in UK

LONDON: PTI leader Imran Khan often gives examples of British justice system and politics in his speeches and interviews but he has mounted campaign in defence of Jahangir Tareen’s ‘Insider trading’ – a crime punishable in the UK & European Union by jail term, harsh fines and criminal record for lifetime.

The Supreme Court of Pakistan judgment stated that the PTI Secretary General Jahangir Tareen had pleaded guilty to insider trading and stood “dishonest” in eyes of the law. The court also observed that Jahangir Khan Tareen did not declare his asset - Hyde House in Newbury bought through Shiny View Limited offshore - in a London suburb of which he is the owner.

It was under Musharraf’s government that Jahangir Tareen ran the “insider trading” scheme, profited from it and returned Rs 73,067,000 (over Rs 73 million inclusive of fine imposed and his illegal gains) to the Securities and Exchange Commission of Pakistan (SECP) for violating state laws after being caught. The SECP could have easily put Tareen in jail by using the relevant laws but it is understood that Tareen used his influence and clout in Musharraf’s cabinet and prevailed on the SECP and the National Accountability Bureau and got away scot free. In a country like the United Kingdom, which is often quoted by PTI leaders, Tareen could have faced a few years in jail, ban on becoming director or shareholder in any company for 6 years and financial penalty.

Following the disqualification decision by the SC, Imran Khan defended Tareen’s insider trading and said that he has a “justified answer” for his insider trading and that Tareen has done nothing wrong. Imran Khan told a private television channel that Tareen didn’t benefit from the practice of insider trading – done in the name of his cook and gardener Allah Yar and Haji Khan - and returned the money to the SECP.

Imran Khan’s defence of insider trading has shocked many as its considered illegal in the US, UK and Europe. Insider trading is not pleaded guilty only but the accused must face a sentence of jail.

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information is also considered as insider trading and those involved are prosecuted and sometime banned for life for holding any office which allows them to manipulate stocks and markets.

UK's Financial Conduct Authority (FCA) has the responsibility to investigate and prosecute insider dealing through its own mechanism and with help from the National Crime Agency (NCA), defined by the Criminal Justice Act 1993, the Financial Services and Markets Act 2000, which defines an offence of "Market Abuse"; and the European Union Regulation No 596/2014. Insider trading in the UK has been illegal since 1980. The fines and punishment were lenient in the beginning but after 2006 strict actions have been taken against the criminals involved in inside trading and between 2009 to 2012 the FCA secured 14 convictions in relation to insider dealing.

In UK, there were five people who were convicted for the insider trading and two of them were sent to jail in May 2016. The Financial Conduct Authority (FCA) said that since 2008 it has secured a total of 24 convictions related to insider dealing and at least 8 people await trial currently. The maximum jail term for insider dealing in the UK is seven years and fine.

The FCA said in a statement to this reporter that it has racked up more than 30 convictions for insider dealing since 2009, involving well-known traders from top investment banks and hedge funds. The FCA started 84 probes this year and last year it initiated 70 new investigations.

Former Deutsche Bank Managing Director Martyn Dodgson was found guilty and sentenced to four and a half years in prison in May 2016 - considered longest term for the crime in the UK since 2007. In the same case, Andrew Hind received three and a half years’ sentence of jail. Both were convicted of conspiring to insider trading and were sent to jail in relation to an investigation which began in 2007.

The FCA said that Martyn Dodgson "sourced inside information from within the investment banks at which he worked, either through working on transactions himself or through being able to glean what his colleagues were working on". He passed this inside information onto Andrew Hind who acted as a "middle man" and "effected secret dealing for the benefit of Dodgson and himself".

In 2014, the former Moore Capital trader Julian Rifat –once feted in the City on a list of “15 institutional investors that matter” –pleaded guilty to eight counts of passing on inside information during his employment. He was the third person to enter a guilty plea having been ensnared by the watchdog’s “Operation Tabernula”.

In February 2011, city banker Christian Littlewood, who amassed almost £600,000 through insider trading with his wife and a friend, was jailed for three years and four months after he passed information to his wife who then used her Chinese name to invest in firms about to be bought. Littlewood, his wife Angie and Helmy Omar Sa'aid, who helped finance the deals, admitted insider trading. This was a case similar to Jahangir Tareen who used his gardener and cook for insider trading.

In March 2009, a former multi-millionaire restaurant boss Tim Power was given suspended two years jail for two offences of insider trading for leaking price-sensitive information about the sale of up-market chain Belgo in 1997.

In July 2012, six people were convicted of insider dealing in a case brought by the FCA. Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah, and Truptesh Patel obtained information from the London printers of Swiss bank UBS and UK brokerage JP Morgan Cazenove on takeovers by firms such as Reuters and used the confidential data to place spread bets which generated £732,000 ($1.1m) between 2006 and 2008.

Under the UK Law, the "insider" is any person who possesses at least one of the following: 1) access to valuable non-public information about a corporation (this makes a company's directors and high-level executives insiders) 2) ownership of stock that equals more than 10% of a firm's equity A common misconception is that.

Insider Trading is the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to nonpublic information about the company.