Insider trader sent back to jail for failing to pay back gains

A convicted UK insider trader is back behind bars after failing to pay back all of his ill-gotten gains.

Pardip Saini was sentenced on Tuesday to a year and a half in prison in the first case of its kind brought by the UK Financial Conduct Authority.

The jail term comes on top of the three-and-a-half year sentence he received in 2012 for insider trading after being prosecuted as part of one of the UK largest insider cases.

Saini was convicted in Southwark Crown Court of failing to pay nearly half of a £465,000 confiscation order originally imposed in 2012 as part of the insider trading conviction. He was released last year from prison after serving the bulk of the first sentence.

It is the first time that the watchdog has successfully prosecuted someone for failing to pay back the proceeds of their crime.

UK authorities generally have a poor record in confiscating the proceeds of crime, with the National Audit Office finding in 2013 that only 26p of every £100 of criminal proceeds is recovered.

"Individuals should not be able to benefit from their crimes and today's outcome should serve as a warning to those considering committing insider dealing," said Georgina Philippou, the FCA's acting head of enforcement.

Saini's solicitor at Bark & Co was not immediately available to comment.

The conviction comes after Saini paid back more than half of his confiscation order - more than the average amount, according to Chris Brennan, a regulatory lawyer at Addleshaw Goddard.

Saini, 42, was convicted for trading in shares of companies including Reuters and Biffa using inside information gleaned from employees who worked in the print rooms at JPMorgan Cazenove and UBS. Saini, who formerly ran a health-supplements business, was convicted of receiving price-sensitive information from the Mustafa brothers. Saini then disseminated the data using an email "drop box" that could be accessed by the four other defendants.

The case, known as Operation Saturn, is the largest successful prosecution brought to date by the FCA or its predecessor, the Financial Services Authority.

"Insider traders almost always make a cost-benefit analysis of their criminality," said Steven Francis, a former FSA official now at Baker & McKenzie, the law firm. "Prospective insider traders will now have to weigh up any benefit they might make against the increasing risk of detection, chunky prison sentences and the appropriation of their wealth."

Saini's most recent conviction comes as the FCA is prosecuting another alleged City insider-trading ring that involves six defendants including a former managing director of Deutsche Bank. That separate case is due to go to trial next year and the defendants deny the charges.

The FCA recently has had a string of successful prosecutions of insider trading - which carries a maximum seven-year jail term - involving guilty pleas from defendants who have included a former hedge-fund execution trader and senior managers at listed companies who have used inside information to trade ahead of proposed deals.

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