Operation Tabernula – has the FCA really shown more teeth than its predecessor?

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Operation Tabernula – has the FCA really shown more teeth than its predecessor?

Published 27 May 2016

The conviction and sentencing of former corporate brokers Martyn Dodgson and Andrew Hind in May 2016 brings the FCA’s largest and most complex insider dealing investigation ever conducted to a near conclusion. The sentences handed down by the regulator, of 4.5 and 3.5 years imprisonment respectively, are the longest in its history for insider trading. 

Mike Steward, Director of Enforcement and Market Oversight, has said: “This was an extraordinary and complex case of a type not prosecuted in this country before.  The message is loud and clear that the FCA will not tolerate sophisticated predatory criminals abusing our markets.”


The investigation, code named Operation Tabernula, started in the hands of the FSA in 2008, and, in March 2010, dramatically involved a series of dawn raids involving 140 personnel across 16 locations. These raids achieved their purpose - the FSA obtained crucial evidence in relation to insider trading which it used to convict three traders, who each received sentences (one suspended) of between 19 months to two years.

Although the raids brought promise of a tougher regulator who was prepared to tackle white collar crime, the FSA was still seen to lag behind the approach of its US counterparts, and was criticised about the time taken for the defendants to be convicted (8 years) as well as the cost of the investigation, which has been reported to be in the region of £14m.

The FCA took up the reigns in April 2013 and, in partnership with the National Crime Agency (“NCA”), has steered the Tabernula Operation to these two further convictions and record breaking sentences. The FCA has also confirmed its intention to pursue confiscation proceedings against these two defendants, to seek to recover the estimated £7.4 million of illicit profits.

The underlying facts

Dodgson and Hind were close friends who were found to have instigated the insider dealing conspiracy. Dodgson would source insider information from within the investment banks at which he worked, either through working on the transactions himself or through being able to glean information from his colleagues. He passed on this information to Hind who then effected secret dealing for the benefit of Dodgson and himself.

The FCA found that the defendants had put in place elaborate strategies designed to prevent their actions from being discovered, including the use of unregistered mobile phones, encoded and encrypted records, transfer of benefits handed over in cash, the use of safety deposit boxes and payments in kind. The FCA relied on five cases of insider dealing to successfully prove a conspiracy following a 12 week trial.    


There is no doubt that the FCA has shown its commitment to the pursuit of this investigation, despite its length and complexity, and in doing so it has embraced new and more sophisticated apparatus. For example, in order to gather evidence in Operation Tabernula the FCA used, for the first time, hidden surveillance via a wiretap in order to record conversations between the defendants.             

That said, this needs to be balanced against the fact that Dodgson and Hind were two of only five defendants brought to trial. The other three were acquitted. Those acquitted included the two traders (Iraj Parvizi and Ben Anderson) who placed the trades on their behalf and whose actions seemingly triggered the investigation. 

In addition, although the sentences are longer than seen previously, they are still significantly short of the maximum 7 years that can be imposed for such an offence, and lower than those seen in the US.

Therefore, although it is clear that the FCA is prepared to go further than its predecessor and push the boundaries in its prosecution of insider trading cases, the convictions in this investigation suggest that there is further for the FCA to go.  


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