Former PM Group manager convicted of money-laundering
Proceeds from insider trading in PM Group shares moved to new account after FSA became suspicious
A former manager at the Bradford-based waste management firm PM Group has become the first person convicted by the Financial Services Authority of money laundering after he tried to cover up insider dealing by siphoning profits into a bank account in his father’s name.
Neil Rollins was found guilty today of five counts of insider dealing and four counts of money laundering at Southwark crown court. If he and his wife, Louisa Rollins, had not sold all their shares in PM based on insider information days before a profits warning they would have incurred a paper loss of £47,000.
The conviction marks the end of one action among a wave of prosecutions being pursued by the FSA, which has redoubled its efforts to tackle insider-dealing rings in the last two years. In March this year a former Cazenove equities marketmaker, Malcolm Calvert, became the most high-profile insider dealer brought to book, receiving a 21-month prison sentence. This week the regulators
charged five people linked to former equity derivatives brokerage Blue Index with alleged insider dealing ahead of seven takeover deals between 2006 and 2008.
Rollins’s position as a senior manager at the PM Group’s trading arm, PM Onboard, gave him detailed insight into the company’s worsening financial position in the summer of 2006. On the strength of this knowledge he sold his entire stake in PM Group weeks before a profits warning that triggered a 17% fall in the value of shares, listed on Aim London’s junior stock market.
When he became aware of the FSA’s interest in his trading, Rollins transferred the proceeds into an account he had set up in the name of his father, David Rollins.
During the trial he claimed in court: “I was not using the price-sensitive information to make my decision [to sell shares].” Before Rollins’s trial his lawyers had tried to argue that the FSA could not use money-laundering charges in this case – the first time the regulator has exercised such powers. This argument went to the supreme court, which ruled for the FSA.
PM Group, which makes scales for waste-disposal vehicles, was acquired by Vishay Intertechnology in 2007.
“This is another milestone in our fight against market abuse,” said Margaret Cole, the FSA’s head of enforcement. “Insider dealing is not a victimless crime and we remain committed to stamping out this type of fraud by those trusted with inside information. Insider dealing damages the very confidence that underpins the integrity of our markets. Rollins’s crime was aggravated by the fact that he sought to hide his conduct from the FSA by laundering the proceeds.”
Insider dealing carries a maximum prison sentence of seven years. Rollins will return to court for a sentencing and a confiscation hearing in January.
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