Operation Tabernula Acquittal: Lessons Learned
Operation Tabernula was a long and winding road. The majority of the defendants were arrested on 23 March 2010, charged on 1 October 2012 and tried over four months beginning on 11 January 2016. The substantial delay alone occasioned by issues over legal aid for counsel instructed in the case set the trial back 15 months.
For defendant Benjamin Anderson, the final verdict of acquittal was a vindication of the many long hours spent absorbing, dissecting and deconstructing the prosecution case theory utilising the very tools the Prosecution relied upon to prosecute. This included the vast number of pages of trading data and other evidence and the substantial hours of covert recording from Mr Anderson’s office.
It is true that cases such as this, relying as they do to a degree on circumstantial evidence, are incredibly difficult for a prosecutor to bring. They require massive manpower and while the regulator is resource rich, the burden and standard of proof can be high hurdles to overcome.
But in this case, while the case involved a huge volume of evidence and unused material, the facts themselves were not overwhelmingly complex - with the exception of the price sensitivity of the relevant information within the investment banks, always a nebulous concept. But no one observing the case would disagree with the characterisation of the jury through their interaction via notes to the court as attentive, serious and fair. The Prosecution explained the tricky concepts of trading well.
Ultimately, the Prosecution relied heavily on the coincidence point of defendants Martyn Dodgson and/or Grant Harrison working for investment banks in which they could have gleaned information and then trading done by Anderson and Iraj Parvizi on instruction from middle man Andrew Hind. Observed in a vacuum, through the six overt acts chosen by the Prosecution as illustrations of the conspiracy, this was potentially compelling. But in the context of the wider trading done by two arguably trading “legends” who executed hundreds of trades each year, one of whom bore the market nickname “mad punter”, the coincidence point became much less potent in the bigger picture. The two traders had traded in so many stocks and sectors, it followed that it may now and again include those which, unbeknownst to them, might have a connection with so-called insiders.
Risk itself takes on a different meaning when you’ll routinely place millions of pounds at risk on the back of other individuals trading. Mr Anderson’s defence was built on painstaking analysis of the trades he had done throughout the indictment period and the trades he had done for the so called conspiracy.
The picture that emerged was the “conspiracy” insofar as it was perceived by Mr Anderson. It was a patchy record, comprised spectacular losses and wrong calls and in the case of the 6 overt act stocks, which the prosecution must have determined was their strongest case, substantial volumes of publicly available information supported the trading decision. Indeed the first overt act traded in the conspiracy had been traded by Mr Anderson at least 8 separate times as it was a perennial takeover favourite.
Indeed, the Prosecution case, which was initially built off the back of Mr Anderson’s copious “old school” handwritten trading notes then ignored those notes when a detailed analysis of them as they pertained to the alleged conspiracy showed the real distance between Mr Anderson and the other defendants. They showed various adjustments being made to the overall profit and loss because it appeared that Mr Anderson was frequently kept out of the loop of the Hind orders.
But more significant than that, the notes showed incredible and mounting losses being made by this “conspiracy”, the covert recordings, among other things, revealed that Hind did not always have the risk appetite of his mystery “man” and he had to be educated on how to use the FTSE index to hedge a trade.
Indeed, these copious pages of handwritten notes evidencing clearly what the Prosecution maintained was a criminal conspiracy, were kept in Mr Anderson’s office for years, many of them strewn haphazardly across his desk, not shredded or disposed of. Mr Anderson’s counsel, Ian Winter QC drove the point home in a very strong closing speech, “look at what people do, not what they say”.
This is to say nothing of the acquittal of the mad punter, Iraj Parvizi, who was cautioned in the witness box for market abuse after volunteering that he had spread a false rumour during his time as king of the penny shares. But really, what did risk mean to a man who would bet £5000 on which wall a fly would land on? Parvizi readily accepted that he had barely engaged with the case papers but routinely challenged the particular interpretation the Prosecution placed on elements of the covert recording. Parvizi asked, for example, why Hind would sometimes not take an exposure himself despite having done so for his “man” if he knew there was inside information, given that he was sitting on a £750,000 debt at the time and why, if he had that gold dust, he would hedge a trade with the FTSE? These points undoubtedly hit home to a sceptical jury, despite Mr Parvizi’s caution.
The case was a challenge for the regulator and it was a challenge for the disparate defendants. The delay (not the fault of either side) put further strain on the men who had waited some time already for a charge to be laid. It remains to be seen what lessons the FCA will take from the case but perhaps the lesson for the justice system is that cases such as this must be prosecuted and defended by a mastery of the evidence which requires time and effort of specialist counsel and solicitors. Both must be resourced to ensure that fairness is maintained.
Mr Anderson was defended by Michael Potts, Catherine Robinson and Tom Orange of Byrne and Partners and counsel Ian Winter QC (Cloth Fair Chambers) and Robin Barclay (Fountain Court Chambers).
Catherine is a solicitor, with a background in corporate regulation and investigations. Catherine graduated with degrees in Law and Asian Studies from La Trobe University in 2007 and was admitted to practice in Australia in 2009 following completion of a post graduate diploma of Legal Practice at the College of Law, Victoria.