Citigroup “Informant” Link To Wealthy Trader Disclosed During High Profile Insider Trading Trial
The ongoing insider trading trial of Walid Choucair and former UBS Group AG compliance officer Fabiana Abdel-Malek has yielded new claims that a Citigroup employee who had access to “price sensitive information” communicated information to a wealthy trader involved in the trial, Alshair Fiyaz, according to Bloomberg.
The U.K.’s Financial Conduct Authority said that the Citi “source” disclosed the communication to them, and that it was backed up by “limited telephone contact” with an intermediary of Fiyaz in 2015 and 2017.
Choucair, at his trial, has argued that tips he received came from Fiyaz and other traders, and not Abdel-Malek. Choucair and Abdel-Malek deny five counts of insider trading and Fiyaz has not been charged.
The FCA, in presenting the new information to the jury, said it couldn’t disclose further details on the “source” because the information could wind up uncovering the identity of their informant. The FCA note didn’t make clear whether Fiyaz had received information from the Citigroup source directly or not.
The FCA says it investigated after it got a tip from an informant on May 14. The Citi employee “did not have computer access to price-sensitive information relating to the five stocks that are the subject of the ongoing trial, though it’s not been possible to conduct a detailed investigation because the disclosure was so recent.”
Abdel-Malek and Choucair are facing a total of 10 counts of insider trading as the FCA pins its enforcement hopes and dreams on a successful conviction – which the agency believes will send a message to other financial criminals in the city that they can face very real consequences, including lengthy prison sentences, for financial wrongdoing.
Recall, we pointed out in late 2018 that the FCA’s reputation was on the line, after charging Choucair with earning an illicit profit of 1.4 million pounds ($1.8 million) from illegal tips. Choucair and Abdel-Malek are accused of illegally trading shares in Elizabeth Arden, Kabel Deutschland, the REITs BRE Properties and Northstar Realty Finance, as well as US energy company Targa Resources.
Bloomberg reported that Abdel-Malek accessed information on pending UBS deals via internal “global list” system, which proved to be her undoing, as the bank was able to track and record her searches. She didn’t attract suspicion initially because, as one prosecutor pointed out, accessing the list and the information therein was “part of her job” as a compliance officer.
A former UBS Group AG compliance officer repeatedly searched internal databases at the investment bank to see sensitive information about five potential takeovers that she shared with a friend, prosecutors said on the first day of an insider-trading trial.
Fabiana Abdel-Malek gave the information to Walid Choucair, lawyers for the Financial Conduct Authority said Friday. The two often used pay-as-you-go phones, swapping SIM cards in and out, to communicate.
“She was in a position of trust and it was part of her job to access, to view, to read” price sensitive information, said John McGuinness, a prosecutor for the Financial Conduct Authority. “She did it on a regular, if not a daily basis.”