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A former employee of US investment bank Jefferies International has been charged with insider trading by the UK regulator for allegedly telling a friend about a takeover of a London-listed company that he was advising.
The Financial Conduct Authority said on Wednesday it had started criminal proceedings against Bobosher Sharipov, a former banker at Jefferies, and his “close friend and business associate” Bekzod Avazov.
Sharipov was working at Jefferies when he advised GCP Student Living on a planned £969mn takeover of the London-listed student accommodation investment fund by US private capital group Blackstone and Dutch pension fund APG in 2021.
The former Jefferies banker allegedly passed on confidential details about the takeover to Avazov, who is then accused of purchasing shares in GCP and making spread bets that made almost £70,000 in profit when its takeover was announced, the FCA said.
The watchdog was alerted to what it claimed were suspicious trades in GCP shares by Avazov “given the timing and profit” of the purchases. It then analysed public records to find his close relationship to Sharipov. The two men were former colleagues and flatmates, it said.
“We believe that Mr Sharipov took advantage of his position so he and his friend Mr Avazov could benefit through committing crime and gaming the system,” said Steve Smart, FCA executive director of enforcement and market oversight.
“The integrity and cleanliness of our markets rely on trust,” he said. “It is right that this case is heard by the courts.”
Insider trading carries a maximum seven-year jail sentence. The FCA has issued general warnings this year to bankers about leaks, which have come alongside an increase in unusual trading activity.
Nearly four in 10 UK takeovers were reported in the media before their announcement in the 14 months to May this year, according to a Financial Times freedom of information request to the FCA.
The two men appeared at Westminster Magistrates Court on Wednesday and neither entered a plea, the FCA said. The case has been assigned to Southwark Crown Court.
The regulator said Jefferies had co-operated fully with the investigation. Sharipov previously also worked at Swiss bank UBS, according to his entry in the FCA register.
A lawyer for Sharipov did not immediately respond to a request for comment. A lawyer for Avazov could not immediately be reached. Jefferies declined to comment.
Additional reporting by Ortenca Aliaj and Suzi Ring in London