The FSA has reported that Mr Thomas Ammann, an FSA approved person, has pleaded guilty to two counts of insider dealing and two counts of encouraging insider dealing, contrary to section 52 of the Criminal Justice Act 1993 (the “Act”). Mr Ammann had been charged alongside two others; Jessica Mang and Christina Weckwerth, both of whom believed Mr Ammann was their boyfriend at the time. Neither knew of the other’s existence.
Ms Mang and Ms Weckwerth both pleaded not guilty and on 15th November 2012, after a trial at Southwark Crown Court, they were both acquitted of one count of insider dealing.
Mr Ammann was an investment banker working at Mizuho International Plc. He formed part of a team which advised Canon, the multi-national technology company, on its acquisition of a Dutch company called Océ (the “Acquisition”).
Whilst advising on the Acquisition, Mr Ammann had access to inside price sensitive information. It was alleged that he passed that information to Ms Mang and Ms Weckwerth and encouraged them to trade in Océ’s shares prior to the Acquisition being announced. Both women then sold their shares when the Acquisition was announced, with Ms Mang making an alleged profit of £29,000 and Ms Weckwerth making an alleged profit of 1 million euros.
Section 52 of the Act makes it a criminal offence for a person who has inside information:
- To deal in, or to encourage another person to deal in, price affected securities in relation to that information where the acquisition or disposal takes place on a regulated market or where the person dealing relies on, or is, a professional intermediary; or
- To disclose the inside information, otherwise than in the proper performance of his employment/profession, to another person.
By virtue of section 53 of the Act, a person is not guilty of insider dealing if he can show that;
- he did not expect, at the time, that the dealing would result in a profit which would be attributable to the fact that the information was price sensitive information;
- he believed on reasonable grounds that the information had been widely disclosed to ensure that no-one taking part in the dealing would be prejudiced by not having the information; and/or
- he would have done what he did even if he had not had the information.
It has been notoriously difficult for prosecutors to achieve successful prosecutions for insider dealing. The prosecution has to establish that the information in question is in fact “inside information” i.e. it must relate to particular securities or a particular issuer of securities, must be specific or precise, must not have been made public and if it were made public it would be likely to have a significant effect on the price of securities. It must also be established that the person receiving the information must have known that the information was “inside information”, that it came from an “inside source” i.e. from a director, employee, shareholder or, as in the case of Mr Ammann, by virtue of a person having access to the information as a result of his employment or profession, and that the person then used that information to trade. These have proven to be very difficult facts to establish and to convey to a jury to obtain successful convictions.
However, having said that, Mr Ammann’s guilty plea means that his case is now the FSA’s twenty first conviction for insider dealing. The first successful conviction was in March 2009.
Criminal cases pursued by the FSA and those which ultimately end up at trial are undoubtedly extremely expensive in terms of time and costs. One would expect there to be an element of disappointment at the FSA with the acquittals of Ms Mang and Ms Weckwerth.
The FSA has clearly stepped up its campaign in respect of market abuse and insider dealing - Mr Ammann is the tenth person to be convicted this year – and it can be expected that the Financial Conduct Authority, when it comes into play next year, will continue to take such a firm approach in its pursuit of reducing financial crime. The FSA has recently confirmed that it is investigating claims of market abuse in the gas market, although it is far too early at this stage to determine whether criminal prosecutions or civil enforcement action will be taken.
Mr Ammann will be sentenced at a later date.