By Caroline Binham and Gavin Finch March 24 (Bloomberg) — The U.K.’s Financial Services Authority arrested a seventh person in an insider trading probe that has already ensnared workers at Deutsche Bank AG, Exane SA and hedge fund Moore Capital Management LLC. All seven will be released on bail, the FSA said in a statement today. Martyn Dodgson , a managing director in corporate broking at Deutsche Bank, and Clive Roberts , head of European sales trading at Exane BNP Paribas in London, are among those being probed, spokesmen for their firms said. The FSA raided 16 addresses in London and south-east England in what it called its biggest insider trading investigation. The regulator is cracking down on the crime, which carries a maximum seven-year jail sentence, after criticism from lawmakers it wasn’t doing enough to halt it. “This is an extremely significant operation,” Simon Morris , a regulatory lawyer at London-based CMS Cameron McKenna, said in a Bloomberg Television interview today. “These are big City names. It shows the FSA is turning its focus to major institutions and the people who surround them.” Graeme Shelley , a trader at London-based stockbroker Novum Securities Ltd., was questioned, a person with knowledge of the matter said. Julian Rifat , an employee at Moore Capital, was also served with a warrant, a person said. Iraj Parvizi , a director of Aria Capital, a fund based in Romford, eastern England, is also implicated, the Daily Telegraph reported today, without saying where it got the information. Parvizi couldn’t be reached on his mobile phone. Computers, Documents Seized The FSA hasn’t released the names and ages of those arrested. More than 140 FSA officials carried out the raids yesterday morning, and seized computers and documents, according to the FSA. The operation was the first time the FSA has worked with the Serious Organized Crime Agency in a sting operation dating back to 2007, according to the regulator. “It is believed that the city professionals passed inside information to traders — either directly or via middlemen — who traded on this information and have made significant profits as a result,” the FSA said in a statement. Deutsche Bank’s office was visited as part of the probe, according to spokesman Michael Golden . Dodgson, 38, joined the Frankfurt-based firm shortly after Lehman Brothers Holdings Inc. collapsed in September 2008, FSA records show. He worked at UBS AG between 2001 and 2004 and Morgan Stanley from 2004 to 2006, the filings show. He didn’t return calls to his office or mobile phones today. Executive Suspended Clive Roberts has been suspended, Exane’s U.K. Chief Executive Officer Andrew Melrose said by telephone today. The firm, 50 percent owned by BNP Paribas SA, is co-operating fully with the enquiry, he added. Novum’s Shelley didn’t return calls to both his office and mobile phones. A number wasn’t listed in directory assistance. He moved to Novum last year from Religare Capital Markets Plc, previously known as Hichens, Harrison & Co., FSA records show. Moore Capital, the $15 billion hedge fund run by Louis Bacon , said in a statement that its office in London was searched yesterday. A spokesman for the firm confirmed one of its employees was arrested. “We understand from the FSA that the investigation of the employee does not involve any of the funds managed by Moore Capital,” the firm said in its statement. The employee has placed on leave and Moore Capital is fully cooperating with the FSA, the company said. The individual was trading for his personal account, said a person briefed on the arrest, who declined to be identified. Dresdner, Brevan Howard Rifat previously worked at firms such as Dresdner Kleinwort Securities Ltd., Brevan Howard Asset Management LLP and VCM Fund Management LLP, according to the FSA Web site. He didn’t immediately respond to a call or e-mail seeking comment. The firm’s London office was previously investigated by the FSA over using insider information. The agency fined one of Moore Capital’s former fund managers for market abuse in September 2008 in a separate case, after he used inside information to buy Rhodia SA bonds. The firm said its employee was placed on leave and it is fully cooperating with the FSA. The individual was trading for his personal account, said a person briefed on the arrest who declined to be identified. Biggest Probe While the regulator said this was its biggest insider- trading investigation, it arrested eight people in July 2008, including former employees at JPMorgan Cazenove Ltd. and UBS AG ’s London offices. The FSA also won a jail sentence against a former trader earlier this month, and last week filed charges in another case against a former banker. Opposition Conservative lawmakers have threatened to abolish the FSA should they win this year’s election, which must be held by June. They haven’t said which agency would undertake the FSA’s criminal work such as insider-trading probes. The regulator last year was given the power to negotiate plea-bargains to help pursue insider-trading investigations similar to those its U.S. counterparts have used to crack down on the crime, such as the case against Galleon Group LLC’s Raj Rajaratnam . The FSA gave a plea bargain to a witness in its case against Malcolm Calvert , the former Cazenove partner who received a 21-month sentence earlier this month. The FSA has been trying to crack down on insider trading at hedge funds in particular, according to Darren Fox , a hedge-fund lawyer at London-based Simmons & Simmons. “That’s really in response to Galleon,” he said. “Since that case broke, they have been really keen to bring their own, and you see regulatory one-upmanship.” To contact the reporters on this story: Caroline Binham in London at cbinham@bloomberg.net ; Tom Cahill in London at tcahill@bloomberg.net .
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Seventh Person Arrested in Britain’s Biggest Insider Dealing Investigation
