Directed trades

Anjam Ahmad was the subject of a Final Notice for having directed trades to a broker with which he had entered into an improved commission agreement with.

Although an initial commission rate of 5bps was agreed between the broker and Ahmad’s firm (AKO) he later entered into an improvement arrangement with the broker. As a result the agreed rate of commission varied from 16 to 72 bps with a weighted average of 46 bps. The overall effect of this was that AKO paid an extra $739K commission. Ahmad received benefits of around £131K – according to the Notice in addition to cash he also received ‘gift vouchers, gold and flights and hotel bookings’. AKO were unsighted on this (and the FSA makes no criticism of AKO) as confirmation notes showed the trades as principal transactions between AKO and the broker with no commission charged.

Despite this Ahmad was only subject to a penalty of £131K, being a disgorgement of the value of the benefits received. In arriving at this decision the FSA took into account co-operation offered by Ahmad in respect of an (unrelated) investigation on insider dealing. With regard to the latter Ahmad entered into a plea agreement with the FSA under the Serious Organised Crime and Police Act 2005, which is the first time the FSA has used these powers. For his insider dealing activities Ahmad received a suspended 10 months imprisonment sentence; sentenced to 300 hours community work; and fined £50K. A confiscation order was also made against him in the sum of £106,280.

The link will provide access to the Final Notice issued by the FSA in respect of the directed trades issue as well as providing a listing of the 11 individuals that the FSA is currently prosecuting for insider dealing.

COntact us for assistance

Please fill our free consultation form and a member of our team will get in contact with you.