Enforcement watch: FCA has secured convictions against two individuals for insider dealing and money laundering    

The FCA has announced that it has secured convictions in Southwark Crown Court against Redinel Korfuzi (a research analyst at an asset management firm) and his sister Oerta Korfuzi.  Sentencing will take place on 4 July 2025.

This follows a multi-site search and arrest operation by the FCA in March 2021, conducted with assistance from the Metropolitan Police, and charges against five individuals in January 2023.  The trial of a fifth individual has been fixed for 28 June 2027 but is subject to reporting restrictions.

Insider dealing offences

Mr Korfuzi regularly obtained confidential, price sensitive information for publicly traded companies as part of his role as a research analyst.  The offences relate to trading in shares of at least 13 companies ahead of market announcements using that confidential information between 17 December 2019 and 25 March 2021, making profits of around £1m. 

According to the FCA's press release, the trades were executed through accounts held by Mr Korfuzi's sister (Ms Korfuzi), his personal trainer and the personal trainer's partner (although the personal trainer and his partner were acquitted of all charges). 

The trades were made using a derivative product called Contracts for Difference, taking positions that the value of the relevant shares would go down and closing the positions after the market announcements.  

Money laundering offences

Mr Korfuzi and his sister were also convicted of money laundering offences in relation to the receipt of cash derived from the proceeds of crime, making 176 cash deposits totalling £198,210.  The FCA press release states that the source of the cash was unrelated to the insider dealing with which they were charged.

Comment

The convictions form part of a steady stream of insider dealing convictions pursued by the FCA over a number of years. The following points are notable in relation to these convictions:

• According to press coverage in relation to submissions made by the prosecution team during proceedings, Mr Korfuzi was able to use remote work during the Covid-19 pandemic as a cover for the insider dealing.  This was a risk which the FCA highlighted in its Market Watch 63 during the pandemic and, accordingly, firms will have been expected to consider whether to put in place additional controls, such as further restrictions in relation to the access to inside information controls and/or considering how to remotely supervise staff with access to inside information.  Whilst many financial institutions have since mandated employees to return to the office, to the extent they have not already, firms should consider whether enhancements could be made to procedures in relation to the identification and control of inside information should future business disruption events occur (such as a cyber-attack) which require temporary or extended periods of working from home.

• This particular trading was identified by the FCA's market monitoring systems.  As such, it would provide a helpful case study for firms in their market abuse training materials to heighten awareness that the FCA's surveillance tools are becoming increasingly sophisticated, and that surveillance extends beyond in-house systems.

• As noted above, the FCA conducted a multi-site search and arrest operation in March 2021.  Whilst it is not clear from the press release whether this included the premises of Mr Korfuzi's employer (who was noted to have fully cooperated with the FCA), firms should ensure clear procedures are in place for dealing with dawn raids or FCA unannounced visits and that these procedures are periodically reviewed and tested to ensure they are up-to-date.

If you have any questions or would like our assistance with any of the matters referred to in this article (including a review of your dawn raid/unannounced visit procedures), do get in touch.