Julian Rifat admits to insider dealing, UK

Julian Rifat, who worked at Moore Capital as a hedge fund trader, has pleaded guilty to eight incidences of insider dealing. His passing on of information on trades generated profits in excess of £250,000.

In the Financial Conduct Authority’s (FCA’s) largest ever probe into insider trading rings, code-named Operation Tabernula, Mr. Rifat is the third person to plead guilty.

If somebody uses material non-public information to gain an unfair advantage in the market, such as trading in shares, or passes on that information to others, he or she is guilty of insider trading.

Mr. Rifat was arrested in March 2010 on his 41st birthday at his home in Oxford.

According to the FCA, Mr. Rifat allegedly passed on price-sensitive data to former Novem broker Graeme Shelley, who had pleaded guilty in March and avoided jail. After receiving Mr. Rifat’s data, Mr. Shelley then placed trades to benefit the two of them.

Mr. Rifat allegedly passed on inside information about eight different companies in 2009, including German retailer Metro, Spanish energy group Iberdrola, German automobile maker Volkswagen, and Barclays bank.

Julian Rifat

Julian Rifat pleaded guilty to eight counts of insider trading.

Mr. Rifat will be sentenced in 2015.

Former execution trader at Legal and General Insurance Management Litd., Paul Milsom, pleaded guilty to insider dealing and was given a two-year prison sentence last year.

The FCA’s director of enforcement and financial crime, Tracey McDermott, said:

“Insider dealing investigations are complex and long-running. Nevertheless we are committed to undertaking the painstaking analytical work which is required to bring these cases to court. In this case measures were taken by those involved to conceal their activities – this included communicating via unregistered Pay As You Go mobile telephones and the diversion of trading profits to third parties. The guilty plea today is a reflection of our capability and determination to tackle these challenging and complex cases.”

What is insider dealing?

Insider dealing, also known as insider trading, is the buying and/or selling of a publicly-listed company’s stock or other securities by people with access to secret, non-public information about the firm.

In several countries, including the United Kingdom, trading based on insider data is against the law, because the practice gives the insider dealer an unfair advantage over other investors without such information.