Insider Trading Siblings Used Lockdown to Make £1 Million
(Bloomberg) -- Before the market opened on Feb. 4, 2020, traders were watching Swiss testing company SGS SA, waiting for its shares to drop.
Overnight it had been announced that the Von Finck family were going to sell 2.3 billion francs ($2.8 billion) of their holding. That's a huge chunk of stock for buyers to absorb, and the price fell the most in nearly five years.
'Stay ready,' Janus Henderson Group Plc analyst Redinel Korfuzi wrote in a message to his sister Oerta in their native Albanian, 55 seconds after the bell that day.
Two minutes later, from the mutual fund giant's office in Bishopsgate, London, he messaged again: 'Stay ready because we have to close it if needed.'
His sister was in the cramped living room of the flat they shared in Marylebone. The day before, she had opened two highly-leveraged short positions. With a little over £10,000 ($13,400) of equity, she had amassed a position with an initial notional volume of more than £150,000, wagering that SGS's stock would fall.
With no answer from Oerta, her brother messaged again, and called her, finally getting through at 8:04 a.m.
'Open the platform and stay ready,' he said on WhatsApp shortly after an eight-second call. Finally, his sister responded: 'Gati Ikam' or, in English, 'I have them ready.'
The exchange is just one of several that the UK's Financial Conduct Authority argued at a London trial was clear evidence of trading on insider information. On Thursday, a jury at Southwark Crown Court agreed, finding the two guilty of insider dealing and money laundering. Two others, Redinel's personal trainer Rogerio de Aquino, 63, and his partner Dema Almeziad, 40, were acquitted of all charges.
At its heart, Redinel's plan was little different to countless other insider trading scandals. As part of his job, he had access to advance information on companies, in this case upcoming large share sales that often lead to price declines when announced. That's what happened with the SGS placing, which Redinel was informed about not long before his sister shorted it.
The Korfuzis repeated this trick more than 10 times over the next year or so, continuing as the two worked from home during Covid lockdowns. With the SGS trade, Oerta and her brother made £7,747 in a little over 20 minutes. Before they were stopped by an FCA raid in March 2021, they had made almost £1 million.
It was a 'trading club to cheat the market,' according to the prosecution's lawyer, Tom Forster.
During the trial, 36-year-old Oerta said she made the trades based on her analysis, without knowing her brother had any insider knowledge. But the jury refused to believe that she was 'subconsciously' influenced by phone conversations across the living room, that she quickly analyzed charts and technical indicators for company names she overheard and placed profitable bets.
Redinel, 38, denied involvement in the trades, at one point saying he was too busy saving what he called a 'dying fund' at Janus Henderson.
In its case, the FCA presented evidence such as call records, data from phones and laptops, as well as a trove of WhatsApp and Telegram messages.
'Check out the app urgently. Check out the other app,' one of Redinel's translated WhatsApps to his sister said.
That was sent less than a minute after he received market sensitive information about a proposed sale of £500 million worth of Hargreaves Lansdown Plc shares in February 2020. Redinel was at Janus Henderson's office at the time and referring to Telegram as the other app, according to the prosecutors.
One minute after he got the Hargreaves information, Redinel called Oerta for eight seconds — when the prosecutors say he could've passed on the company's name. Within 15 minutes, Oerta moved money between accounts and began shorting the shares.
Other companies traded included vehicle manufacturer Daimler Truck Holding AG, budget airline Jet2 Plc and pharmaceutical firm Dermapharm Holding SE. Janus Henderson wasn't accused of any wrongdoing.
'He was in truth the king of stocks. She the enthusiastic apprentice,' Forster said during the trial.
According to prosecutors, British national de Aquino and his Saudi fiance were 'secret proxies' for the trading syndicate and handled 'dirty cash.'
Both had pleaded not guilty and maintained they didn't know Redinel had insider information. They didn't testify during the trial.
To make the bets, Redinel helped de Aquino and Almeziad open trading accounts. De Aquino had told police that they were 'two idiots' who were hoodwinked by him.
Oerta made about £430,000 from the trades, while de Aquino and his girlfriend raked in £135,000. Another trading account controlled by the siblings posted £408,000.
The siblings claimed to have never discussed the trading or the massive profits with each other. The prosecution saw it differently.
'The truth is for the residents of Brunswick House there was never going to be enough money,' Forster said. 'Arrogance, pride, entitlement and greed drove them on – and it has ruined them.'
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The Hindu
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