James Sanders, a director of Blue Index Limited ("Blue Index"), a specialist contracts for difference brokerage, his wife Miranda Sanders and James Swallow, a co-director of Blue Index were sentenced for insider dealing on 20 June 2012.

James Sanders was sentenced to four years in custody and disqualified as a director for five years after pleading guilty to 10 charges of insider dealing; Miranda Sanders was sentenced to 10 months in custody after pleading guilty to five charges of insider dealing; and James Swallow was sentenced to 10 months in custody after pleading guilty to three charges of insider dealing.

The source of the inside information in this case was Arnold McClellan, a senior US partner in a large accounting firm, who was privy to information regarding a number of mergers and acquisitions in US securities listed on various exchanges. The prosecution’s case was that inside information was leaked by McClellan, Miranda Sanders' brother-in-law, or her sister Annabel McClellan, and passed to James and Miranda Sanders who used the information to commit insider dealing in securities between October 2006 and February 2008. James Sanders also disclosed information to others including James Swallow, who used that information to commit insider dealing. In addition, James Sanders encouraged clients of Blue Index to trade in contracts for difference on the basis of that inside information. The total profits generated by the defendants as a result of the insider dealing were approximately £1.9 million, while the total profits generated by clients of Blue Index amounted to approximately £10.2 million.

This case also involved a parallel investigation by the US Securities and Exchange Commission (the SEC) and US Department of Justice (the DoJ), together with the Federal Bureau of Investigation. As a result of the action taken by the SEC and the DoJ, Annabel McClellan reached a settlement which included a $1 million fine and 11 months in prison without parole. Annabel McClellan told the SEC that her husband was not aware of, or involved in, passing inside information to her or others and the case against Arthur McClellan was dropped.

The convictions represent a significant victory for the FSA, which has faced criticism previously over its failure to tackle insider dealing within the financial services industry. To date the FSA has secured 20 convictions for insider dealing and is currently prosecuting a further 4 others accused of committing this offence.