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Financial

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Categorized | Financial

Ex-Logica analyst passed inside information to neighbour and relative


Posted on November 29, 2016

A former business analyst at Logica allegedly passed inside information about its £1.7bn takeover by CGI Group to his London neighbour and to his brother-in-law, a court has heard.

The UK’s Financial Conduct Authority has charged Manjeet Singh Mohal with two counts of passing on inside information on May 28 2012, three days before the Reading-based technology services company disclosed an approved takeover by CGI. That announcement that would see the FTSE 250 company’s share price soar from 65.7p to 110p.

‎Reshim Birk, Mr Mohal’s neighbour in the London suburb of Southall, bought shares and options in Logica after ‎a tip-off from Mr Mohal, the FCA alleges. Surinder Pal Singh Sappal, Mr Mohal’s brother-in-law, also bought shares, the watchdog says. Mr Birk and Mr Sappal face one count each of insider trading, according to the indictment.

Mr Mohal, who had worked at the company for a decade as a business analyst, was not included on Logica’s formal list of insiders on the takeover, but in 2004 he signed an official company code of conduct around inside information “akin to the Official Secrets Act,” Andrew Marshall for the FCA said on Tuesday.

“The prosecution ‎case is that when you look at the evidence, there’s clear evidence that he must have obtained inside information and that he then disclosed it to Reshim Birk and Mr Sappal,” Mr Marshall told the jury at the Old Bailey. “We can’t say precisely how he got that information. We don’t have to prove it either.”

Mr Mohal sat next to Ryan Willmott in Logica’s office. Mr Willmott was on the insider list for the takeover and was gathering information about the deal, the jury heard. Mr Mohal was assisting Mr Willmott in the weeks running up to the takeover. The group finance director has given evidence that she was “surprised” Mr Mohal was not considered an insider, the jury heard.

Mr Mohal called his neighbour, Mr Birk, in the early evening of May 28 as the Logica board was meeting to discuss the deal announcement, the jury heard. The next morning, Mr Birk called his broker at Investec and bought £20,000 of Logica shares and, unusually for his portfolio, £5,000 worth of options, saying he had a “hunch” about a possible takeover — prompting a warning from the broker over illegal trading.

A suspicious transaction report was filed by Investec the next day.

The defendants deny the charges and now face a four-week trial.

Insider trading carries a maximum sentence of seven years in prison — although the longest sentence meted out in the UK to date has been four and a half years in another FCA case earlier this year.

Witnesses in the trial will include Charles Wilkinson, who was head of corporate broking at Deutsche Bank at the time, advising Logica on the takeover. ‎Logica officials will also appear as witnesses.

The trial comes after a probe by the FCA dubbed Operation Holt.

The besuited defendants sat silently in the dock as Mr Marshall outlined the prosecution case to the jury.

The trial continues.