A British judge handed a 12-month prison term to a former equity portfolio manager at BlackRock, ending his promising career in UK fund management circles after he was convicted of conspiring to insider deal in a case spanning London, Switzerland and a Panamanian offshore company.
The sentence brings to a close the Financial Conduct Authority’s investigation, which began in 2012, in what the FCA described as a complex insider dealing operation. The charges related to a period between 2010 and March 2011.
Mark Lyttleton, who was based in BlackRock’s London office, pleaded guilty to two counts of insider dealing in relation to trading in shares of EnCore Oil Plc in October 2011, ahead of news about a proposed takeover and buying call options in Cairn Energy Plc related to the discovery of oil in Greenland.
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The former portfolio manager at BlackRock was sentenced to one and a half year in prison, and was also fined £233,086 ($287,681). However, Mark received a third off his sentence for pleading guilty.
Lyttleton’s trades were conducted using an overseas asset manager trading on behalf of a Panamanian registered company called Huduno Invest S.A.
More specifically, Lyttleton was able to use the inside information from Encore’s advisors Rothschild concerning Premier Oil Plc’s proposed acquisition of the shares in Encore. He passed this information onto his asset managers who acted as middlemen and purchased 175,000 shares in Encore Oil a short time before any public announcement was made about the stocks concerned.
In the second case, Lyttleton was told by another Blackrock portfolio manager that Cairn Energy had discovered oil in Greenland. Having obtained inside information, he bought £10,000 in call options ahead of the public announcement regarding the drilling results. However, he lost this investment after it emerged that Cairn’s optimism was premature, and that oil had not been discovered.