Former Cazenove Partner Found Guilty of Insider Trading

LONDON—Malcolm Calvert, a former partner at U.K. stockbroker Cazenove known by his peers as “Streaky,” was found guilty of five counts of insider trading in a case at London’s Southwark Crown Court on Wednesday.

The veteran of the City of London financial district made a £103,883 ($155,769) profit from the trades, which took place between 2003 and 2005, according to the U.K. Financial Services Authority. Cazenove is now part of U.S. bank J.P. Morgan Chase & Co.

Mr. Calvert retired from Cazenove in 2000 but asked a friend, Bertie Hatcher, to purchase shares based on tips he received from a source, and they split the proceeds, according to the FSA. Following the tips, Mr. Hatcher bought shares in HP Bulmer Holdings PLC, Vernalis Group PLC, MacDonald Hotels PLC, Johnston Group PLC, South Staffordshire PLC and RAC PLC shortly before takeover offers were announced, the FSA said.

Mr. Calvert had been charged with 12 counts of insider trading but was found not guilty on seven counts. The case is the FSA’s third criminal prosecution for insider dealing.

Mr. Calvert, 65 years old, was released on bail Wednesday until sentencing Thursday afternoon. His lawyer, Hugo Keith, couldn’t be reached for comment.

“This is another milestone in our fight against market abuse,” Margaret Cole, director of enforcement and financial crime at the FSA, said in a statement released following the verdict. “The guilty verdict is a shot across the bow for any City workers who may be tempted to trade using insider knowledge. Our message is simple: If you take part in such activity, you run a very real risk of the FSA taking criminal action against you.”

The regulator added the Calvert case was notable for the involvement of Mr. Hatcher, a retired bookmaker and insurance broker, as a key witness.

Because of his assistance to the investigation, the FSA didn’t seek criminal prosecution for Mr. Hatcher, but Wednesday fined him £56,098, which is equivalent to the profit he made from the trades.

Cazenove said the case was against an individual who had left in 2000. “There were never any charges brought against Cazenove, and no breach of systems and controls was identified. We co-operated fully with the FSA throughout the investigation and will continue to support them in their efforts to ensure that the U.K.’s financial markets are free from abuse,” it said in a statement.

Source

Posted in Insider Trading | No Comments »

Former HBOC GC Settles Accounting Fraud Charges at McKesson HBOC

The SEC settled charges against Jay Lapine, the former GC of HBO & Company, a vendor of health care technology that merged with McKesson in 1999. Lapine was charged in a previously-filed action with securities fraud in connection with a financial reporting fraud at McKesson HBOC, Inc. (now, McKesson Corporation), a Fortune 100 company headquartered in San Francisco, California. Lapine consented to the entry of judgment without admitting or denying the allegations of the Commission’s complaint except as to jurisdiction.

The Complaint, filed September 27, 2001, alleged that Lapine, together with other senior executives, participated in a long-running fraudulent scheme to inflate the revenue and net income of HBOC. As part of this scheme, Lapine took part in negotiating two large backdated transactions with side agreements containing cancellation contingencies that enabled the companies to recognize revenue in earlier reporting periods. Both of these practices failed to comply with Generally Accepted Accounting Principles. The fraud enabled HBOC and McKesson HBOC to report falsely in press releases and in periodic reports HBOC filed with the Commission that the companies were having an unbroken run of financial success and had continually exceeded analysts’ expectations. However, when McKesson HBOC announced in April 1999 that the company was conducting an internal investigation into financial reporting irregularities, its shares tumbled from approximately $65 to $34, a drop that slashed its market value by more than $9 billion. The Commission also alleged that Lapine failed in his gatekeeper role during the multi-year long scheme.

The final judgment against Lapine permanently enjoins him from violating federal securities law, bars him from acting as an officer or director of a public company for a period of five years, and orders him to pay a civil penalty of $60,000. Lapine was acquitted on November 19, 2009 of criminal charges related to the fraud at HBOC and McKesson HBOC.

Source

Posted in Accounting Fraud | No Comments »