Wednesday, June 29, 2016

The Story of Britain’s Biggest Insider-Trading Trial (BW)

Operation Tabernula was eight years, and $20 million, in the making.

Iraj Parvizi, aka Fatty or the Mad Punter, a Bentley-driving, racehorse-owning Iranian, whose life had been one endlessly escalating wager, walked to the witness box with uncharacteristic anxiety. His hands shook, and he was dressed carelessly, in jeans, sneakers, and an untucked shirt. Parvizi was on trial in London for participating in what prosecutors described as the biggest insider-trading ring in U.K. history, and four co-defendants, the other alleged conspirators, looked on from the dock. It was Week 13 of the proceedings, a Wednesday in April, and Parvizi faced years in prison if convicted. Once he’d taken his place, his barrister reminded him: Just be yourself. The Mad Punter smiled and took control of the courtroom.

Resting one foot on a nearby chair, Parvizi described his anarchic life in the markets. “There are no rules,” he said. “Anyone can start a rumor. It’s just gung-ho, go for it, do what you want.” The jurors, who’d struggled to stay awake during discussions of contracts-for-difference and margin calls, were rapt, as if Parvizi were a different species. He’d gone from making doner kebabs to transacting with royals, he said, developing a network that never stopped gossiping about stocks. Three days into Parvizi’s testimony, prosecutors tried to show that his gains were the result of an illegal advantage. How had he traded up a fortune when ordinary investors struggle to get single-digit returns?

“You’re making out like I’m the only liar in the stock market,” Parvizi said. He described a world where rumors circulate on phone screens, fabricated stories are fed to a gullible press, and returns correlate with whom you know. The only difference between stocks and any other form of gambling, he said, as if talking to a roomful of children, is that the stakes are higher. His co-defendants nodded in agreement.

“When I was arrested,” Parvizi said at another point, “I was thinking, ‘Why isn’t every trader in the market being arrested?’ Where does insider trading start, where does it stop?”

In a gallery at the back of the chamber, it was a small team of investigators’ turn to be nervous. Some of them had devoted eight years to the case. Operation Tabernula, as it was known, was a landmark for the Financial Conduct Authority, a rebuttal to critics who said the regulator was too soft. The FCA had compiled 46 binders of evidence and 320 hours of surveillance audio. But this wasn’t the U.S., where the government has a well-rehearsed routine of flipping targets and locking in plea deals. The men in the Tabernula dock liked their odds with a jury. In the same courthouse three months earlier, the FCA’s sister agency, the Serious Fraud Office, had seen a different trophy case collapse. The competence of British financial regulation was on trial, too.

Throughout the proceedings, the five defendants sat in a neat diagram of their alleged scam. In the front corner sat Martyn Dodgson, 44, a red-haired banker, dressed in chinos and boat shoes. To his left was Andrew “Grant” Harrison, 46, an olive-skinned New Zealander with slicked-back hair. Both had worked at investment banks, in positions that let them know in advance when companies were going to make deals.

In the row behind them sat a second pair—these two, major-league day traders. One was Parvizi. The other was Benjamin Anderson, a septuagenarian with a grandfatherly smile. Raised in Glasgow, the son of a grocer, he was now worth £100 million (about $142 million). These two, prosecutors said, had taken Dodgson’s and Harrison’s inside information and traded on it.

Finally, sitting apart from the others, was Andrew Hind, 56, a weasel-thin oddball with a degree in decision theory, a background in accounting, and a pair of reading glasses on top of his head. The government said Hind was the connection between the guys with the information and the guys with the money—a linchpin who ran operational security and distributed the profits.

When the trial began, in January, prosecutors said the group had netted at least $10 million through insider trading. What made the case fascinating—what had the entire London financial scene watching and waiting for the precedent it might set—was that the defendants’ version of events wasn’t so different from that of the prosecution. Parvizi and the others acknowledged joining up to trade. They acknowledged disguising their activities with encrypted devices and burner phones. But, they maintained, they’d never knowingly traded on information that was, legally speaking, “insider.” The men said their investments, even those that were incredibly well-timed, stayed on the legal side of the line between privileged information and well-informed rumor.

The trial ran for four months, and at times Courtroom 3 became a circus. Anderson suffered a heart scare after two days on the stand, repeatedly delaying the proceedings. A reality-TV star sat in the audience. Harrison, making the most of the judge’s direction that the men could come and go as they pleased, barely showed up. Parvizi maintained his cool, even when his character was being savaged. During cross-examination, the lead prosecutor observed that lying appeared to come easily to him. Matter-of-factly, Parvizi replied, “Of course.”

Dodgson breezed through childhood in Lancaster, a pretty river town in the north of England, with a cricket bat under one arm. In 1993 he left home for London, and after a few years charmed the City’s elite investment banks, getting hired first at J.P. Morgan Cazenove and then at UBS as a corporate broker—a kind of professional glad-hander who smooths relations between companies and shareholders. Dodgson specialized in financial firms. Whenever one of UBS’s clients engaged in takeover talks or considered raising equity, Dodgson discreetly gauged how the move would go down with investors.

Dodgson had to know finance and economics, but really his job was about relationships. Despite its multitrillion-dollar size, the London equity market was a cozy place. The same institutional investors dealt with all the biggest firms, and Dodgson knew everybody. Witty and gregarious, he started an annual pub quiz night for investors and executives.

Then, in July 2001, at age 29, he went to his brother’s stag party in London. Dodgson’s brother worked at Topshop, and among the attendees was Hind, the fashion retailer’s onetime financial director. Hind was 41 and somewhat socially awkward, but he impressed Dodgson with his intelligence, connections, and wealth. The men lived near each other and began to meet for pints. The conversation always came back to the markets, and sometime around 2003 they struck an alliance. Hind had access to capital, prosecutors would later establish, and his young friend had a head full of potentially market-moving information. Hind would front the cash and arrange the trades; Dodgson would take half the gains or losses.

English law defines inside information as that which isn’t generally available and would be likely to have a significant effect on the price of a security if made public. For a crime to be committed, a person leaking inside information, or a person trading on it, must be aware that the material is privileged. To stay well clear of the line, banks have further rules about what an employee can and cannot do. Dodgson kept his arrangement with Hind quiet, knowing it would never pass muster with his employer.

Their trades made money, and Dodgson started to keep a spreadsheet of everything he was owed. In one column, he tracked progress toward a dream figure, £5 million, enough to retire from finance and maybe enter academia. Rather than transfer the winnings between bank accounts, which might have set off alarms, Hind often paid his partner in kind: £210,000 in home renovations and British Airways flights. Hind also gave Dodgson cash—on one occasion, he handed him £50,000 over a curry. Both men ploughed their profits back into small businesses. Hind dabbled in black vodka, high-end watches, and real estate. In 2006, after an introduction from a mutual associate, he flew to Dubai to meet a potential investor.

In 1977, Parvizi, the son of an Iranian diplomat, was sent to England for an education. When the revolution struck in 1979, his family lost everything. Parvizi didn’t finish school and spent his early adulthood drifting between jobs—double-glazing salesman, pizza delivery boy, kebab-shop worker. At 22 or 23, living in a seaside town in Kent, he went to a local poker game and saw a new face: a London gentleman named George Maxwell-Brown.

The new guy cleaned the Kent lads out. As the others cursed their luck, calling the man a hustler, Parvizi simply shook the stranger’s hand and said, “Thanks for the lesson.” Maxwell-Brown, impressed by his attitude, gave Parvizi his card, and soon after a job at his London business, which provided short-term loans to wealthy foreigners looking to buy assets in the U.K. Parvizi began mingling with Nigerian chiefs and Saudi princes and soon branched out on his own. He drove Bentleys and Ferraris; opened a combination spa-boutique-restaurant; and invested widely, in diamonds, property, and horses. In the 1990s he started betting on equities.

Surveillance photo of Parvizi walking with Anderson

In 2000, at a stockbroker charity dinner, Parvizi met Anderson, then 56 and a legend in day-trader circles. Mathematically gifted, he’d created an eight-figure fortune out of nothing. A self-described parsimonious Scot, he shunned the trappings of wealth and reinvested his profits in areas from biotechnology to oil. Like Dodgson and Hind, Parvizi and Anderson made a pact to trade together, despite their obvious differences. Six weeks after Parvizi bought Anderson a Bentley, a gift after a particularly big win, Anderson gave it back, saying it was “too juicy”—it guzzled too much fuel.

With no formal training, Parvizi had little understanding of the minutiae of finance. He traded essentially without limits, gambling millions at 90 percent leverage; he’d later tell the court that he spread false rumors to move stocks. Parvizi moved to Dubai in 2003. In 2006, when his earnings totaled some £70 million, he took the meeting in Dubai with Hind, in an upmarket hotel lobby. Parvizi agreed to lend him £1 million for a new property venture. Other types of deals soon followed.

After that 2006 meeting, Hind and Dodgson, the fixer and the banker, now had access to the vast trading power of Parvizi and, through him, Anderson. At trial a decade later, prosecutors alleged that Dodgson would sniff out opportunities and pass them on to Hind, who handed them to the moneymen, Parvizi and Anderson, to execute the trades. Parvizi and Anderson acknowledged making the transactions but said that they dealt with only Hind and never knew if the information came from an insider. Dodgson, from his end of the operation, said he never knew who placed the bets.

Hind tried to keep the arrangement secret. He bought untraceable pay-as-you-go phones and made payments in cash and via Swiss bank accounts. In painstaking but opaque records, he referred to each member of the group by a nickname: The paunchy Parvizi was “Fatty,” and Dodgson was “Fruit.” (Privately, Parvizi called Hind “Nob,” British slang for the male member. Anderson, who was more polite, softened that to “Nobu.”) Later, Hind bought six “iron keys,” encrypted USB sticks that leave no trace after being plugged in. On an iPod he kept a memo titled “Dollar Operations Risks” that listed the group’s potential exposures, such as “fruit detection”—an apparent reference to the possibility of Dodgson getting caught. Outside of business, Hind was equally fastidious. He was fanatical about food, writing detailed notes on quinoa and the dangers of olive oil. When the financial crisis hit, he stocked up on canned goods and built an armory of spears, hockey sticks, and baseball bats.

The group’s first major score, according to the prosecution, came in October 2007. Dodgson had moved to Lehman Brothers, and his colleagues were advising Carlsberg on its bid with Heineken to acquire the U.K. brewer Scottish & Newcastle. On Oct. 15, Dodgson’s co-workers were readying a presentation on the deal, code-named Project Rainbow. Dodgson called or texted Hind six times that day. Records first show Hind looking up Scottish & Newcastle’s ticker, then Parvizi. The next morning, Parvizi and Anderson, using eight different brokerage accounts, started assembling a bet worth more than £30 million.

Rumors of a takeover hit the wider market on Oct. 17, and at 11:47 a.m. Scottish & Newcastle confirmed them. One minute later, Parvizi and Anderson started closing out their positions. The shares jumped 18 percent, and they made a £4.4 million profit. Spreadsheets later found in Hind’s home showed he received £562,000, of which half was reserved for Dodgson. Parvizi and Anderson would later say in court that Scottish & Newcastle had been hyped as a takeover target in the press for months, and their position at the moment the rumors were confirmed was a coincidence.

Parvizi once bet £5,000 on where a fly would land—and won

It was a sensational start, but there were only so many big-ticket mergers-and-acquisitions deals to trade on. Expanding into small- and mid-cap companies would offer more opportunities. A few weeks after the beer deal, Dodgson set up a lunch with Harrison, a tall, suave former colleague from UBS who now worked at the stockbroker Panmure Gordon. The New Zealander agreed to join the group. Hind nicknamed him “Little.” At trial, Harrison would say he was recruited by Hind only for his general market knowledge and not for specific intelligence about his clients.

One of Harrison’s clients was NCipher, an internet security company. A few months after the lunch, shares in the company had fallen. Harrison was one of a limited number of people who knew the company had received two takeover offers, and prosecutors would later allege he passed that information to Hind. On May 8, 2008, Parvizi and Anderson bought shares worth £168,000. On July 8, Harrison e-mailed a colleague to say a deal had been struck; Parvizi and Anderson bought an additional £669,000 the next day and more the day after that. On July 10, when NCipher notified the market it was in late-stage takeover talks, the share price jumped 73 percent. Parvizi and Anderson made a £724,000 profit. Hind’s records show Harrison received £41,000. An electronic Post-it note from the time, later retrieved on Harrison’s PC, had four characters: “n+41.”

Prosecutors said that from 2006 to 2010, the group made investments in 59 companies, at least six of which they alleged crossed the line into insider trading. But that was a tiny fraction of the scores of transactions Parvizi and Anderson made each week. The pair had traded prolifically for years, using dozens of brokerage accounts. Later, they accused prosecutors of cherry-picking the trades where they’d profited and ignoring the many where they’d lost out.

In the meantime, Parvizi kept living as only he could. He owned thoroughbreds, including a Breeders’ Cup champion, and played poker with Premier League footballers in the cordoned-off Red Room at Les Ambassadeurs, the casino from Dr. No. Parvizi would bet on anything. He once wagered £5,000 on which wall a fly would land on—and won.

In the spring of 2005, London’s moneymen had little cause to fear their overseer, the Financial Services Authority. Funded not by taxpayers but by the industry it was meant to guard, the FSA had a mandate to foster market stability, protect consumers, and reduce financial crime. At the last, it was struggling. The FSA had just been forced to reduce a fine on an insurance company after admitting a string of errors, and a formal review of its enforcement abilities was under way.

The agency’s headquarters were in a slightly dated structure in Canary Wharf, literally in the shadows of financial-company skyscrapers. One day that spring, in a seventh-floor boardroom, three executives were interviewing candidates for the job of head of enforcement. They asked one of the finalists, Margaret Cole, how she’d fix the FSA. Cole had an answer ready: “Insider dealing.”

It was a surprisingly radical suggestion. The FSA had never prosecuted anyone for insider trading. The agency saw itself more as a facilitator than as a watchdog and took the view that dodgy behavior could usually be handled with a stern phone call to a bank’s chairman. But Cole had come from the private sector, where success was measured in results. Birdlike, with sandy hair and intelligent eyes, she was a litigator who’d made her name helping pensioners swindled by the media tycoon Robert Maxwell, before he fell off his yacht and drowned.

Cole got the job. A few weeks later, she attended an internal briefing on a suspected insider-trading ring. One of the conference room walls had a vast diagram linking individuals and companies around the world. Maybe things aren’t so dire after all, Cole thought. She asked, “When will we get to a prosecution?” A staffer replied, “About four years.” Cole returned to the FSA board and told them they didn’t have a single worthwhile criminal insider-trading case. They’d have to start from scratch.

Over the next two years, Cole eliminated about a third of the agency’s enforcement staff and set up a mixed team of lawyers, IT specialists, forensic accountants, and investigators, drawing from both inside and outside the agency. She also increased the FSA’s powers. She successfully lobbied the British government to extend the law to allow the FSA to offer plea deals to cooperative suspects, as U.S. regulators do. And she persuaded the Serious Organised Crime Agency (SOCA), a law enforcement unit focused on drugs and gangs, to lend its surveillance powers.

Cole also invested millions in technology to detect unusual market activity. The FSA began to better scrutinize the “suspicious transaction reports” (STRs) that brokerages file on customers who change their behavior or go on improbable streaks. These efforts started to produce prosecutions, albeit minor ones: a solicitor and his father-in-law; a dentist and his son; a group of opportunists who worked in the printing rooms of investment banks. But Cole wanted to go after organized, habitual offenders with links to the biggest firms.

On Oct. 17, 2007, a spread-betting firm filed an STR on traders who’d made a killing on the Scottish & Newcastle deal. Cole’s team recognized two names that had cropped up on such lists before: Anderson and Parvizi. The investigators built profiles of the pair. For years, they found, Parvizi and Anderson had beaten the market with incredible regularity. In the past, the FSA would have done little. Now it asked SOCA’s plainclothes officers to tail the men.

Anderson kept an office on the ground floor of a gray stone building in Belgravia, a gracious neighborhood of Georgian houses and private garden squares. In August 2008 the police broke in and installed a bug behind the refrigerator. Two months later, on a mild morning amid the financial crisis, Parvizi came over to talk to the man he affectionately called “Uncle.”

Surveillance photo of Hind in his BMW.

The two men discussed a debt Hind had run up, and after a time Parvizi walked out of the office and into a waiting silver BMW 4x4. Hind was sitting in the driver’s seat and pulled into the London traffic. A police photographer captured the moment from across the street. Less than an hour later, Parvizi was back inside the office. Hind had agreed to pay back the money he owed, he assured Anderson. And that wasn’t all.

“Deutsche Bank,” Parvizi said. “He’s working at Deutsche Bank.” Without using Dodgson’s name, Hind had told Parvizi that Dodgson had again changed employers, this time from Lehman to the German investment bank. It was one of London’s biggest M&A advisers and a potential fountain of lucrative intelligence.

“He says he’s hungry,” Parvizi told Anderson. Dodgson had “done his bollocks”—slang for going nearly broke. “Because you know he worked for Morgan?” Parvizi said. “He says he got f---ed on Lehman’s shares as well.”

Then Parvizi uttered a phrase that would haunt him at trial: “We’ll be the only ones getting it.” Prosecutors said it was a reference to getting nonpublic information ahead of the rest of the market. Parvizi said he was simply relaying what Hind had told him and didn’t believe it to be true. Anderson said he didn’t give it any credence because Parvizi was, by his own admission, prone to exaggeration.

Six miles east, on the 27th floor of a building in Canary Wharf, Cole’s investigators listened to the conversation with a mixture of joy and disbelief. Parvizi hadn’t said Dodgson’s name, but by laying out his work history, he’d given the FSA enough to trace the inside man. It was also the first time the FSA had heard about Hind. Cole’s big prosecution was falling into place.

Dodgson had been in bed for four hours when he woke to a banging at his door. It was 5:40 a.m. on March 23, 2010, and he was severely hung over. Almost 18 months had passed since Parvizi had unwittingly outed him, and Cole’s team had spent the time meticulously building a case. Now, waiting on the doorstep of Dodgson’s four-story Hampstead home were more than a dozen police officers and investigators.

They read Dodgson his rights and piled into the property, ransacking drawers and grabbing papers, laptops, and phones. In a kitchen cupboard, they found a dossier marked “confidential,” which outlined News Corp.’s proposed takeover of BSkyB—documents which, as a financial-sector specialist, he had no reason to possess. Under a bed, in a small, locked red box, was the iron key Hind had bought him three years before.

Shocked and nauseous, Dodgson was driven through the London streets to Holborn police station. At the same time, similar operations were taking place across the capital, in Oxfordshire, and in Kent. Hind was seized at his home in Muswell Hill, along with three more iron keys stashed in a metal wall safe in his study. Parvizi was picked up at the London Clinic, a private hospital in tony Marylebone. He’d contracted a throat infection and was wired to an IV drip when the police entered his room. Anderson was arrested the next day, at Gatwick Airport, as he returned from a holiday in St. Lucia. The authorities weren’t aware of Harrison yet, and his home wouldn’t be searched for another two years. When Dodgson was interviewed that afternoon, he denied everything; Hind, Anderson, and Parvizi, advised by their lawyers, clammed up.

Sixteen locations, including Deutsche Bank’s London headquarters, were targeted by 200 police officers and FSA investigators. Several other individuals were also arrested in relation to a suspected second, loosely connected trading ring. Cole helped coordinate events from a command center on a vacant floor at FSA headquarters. As the evidence started arriving she allowed herself a moment of self-congratulation. Dramatic newspaper accounts appeared within hours. Cole was compared to Eliot Ness, the U.S. agent who brought down Al Capone. The headline in the Evening Standard: “Margaret Cole: The City Ball-Breaker.”

An early conundrum was gaining access to the iron keys. The devices had a security feature that wiped out files after 10 failed password attempts. Several tries in, the authorities were getting desperate. The breakthrough came when they found an e-mail sent by Dodgson, a car fanatic, just before he left Lehman. Included on the list of PINs and passwords was “Lamborghini55.” When they tried it on his iron key, it worked. Among the unlocked files was a balance sheet, itself protected with the code “maserati,” that detailed Dodgson’s shifting assets and liabilities. One column, headed “trading,” laid out transfers between him and Hind.

Anderson had made hand-scrawled records in notepads that made little sense at first glance. Parvizi kept virtually no records. Hind had a detailed chronicle of the arrangement, but his notes were shrouded with codes and shorthand.

Eventually, the forensic team linked the various documents. On a master spreadsheet, Hind had listed the companies the group had traded in, the profits, and the sums the various participants were owed. When compared with Anderson’s and Dodgson’s accounts, many of the figures tallied. The records were cross-referenced with trading data and logs of the various e-mails, texts, and phone calls among the men.

On Oct. 19, 2012, Dodgson, Hind, Anderson, and Parvizi appeared at Westminster Magistrates’ Court charged with conspiracy to commit insider trading. It was the first time they’d all been in the same room.

“If everyone told the truth, the stock market would not move”

Southwark Crown Court is an austere 1980s brown-brick cube on the south bank of the Thames. The five defendants—Harrison was charged in 2013—took their seats inside on Jan. 14, 2016. Six years had elapsed since their arrests, during which, unable to work, most had separated or divorced. Cole had left the FSA, which itself was gone—replaced, in a post-crisis reform, by the Financial Conduct Authority.

The new agency was represented by Mark Ellison, a storied criminal lawyer who’d argued for the British government on cases relating to the legality of the invasion of Iraq. The first few days of the trial were gripping: code names, encryption, secret rendezvous. The jurors were enthralled. Then came weeks of details about trading data and phone records, the tedium of any white-collar investigation, and their enthusiasm waned.

The defendants gave their side of the story six weeks in. Hind and Harrison declined to testify. The first to take the stand was Dodgson. Calmly and articulately, he insisted he’d never discussed confidential client information with Hind, and that the BSkyB documents in his kitchen cupboard must have been picked up from a printer at work by mistake.

Anderson, in a woolen sweater, had the demeanor of a kindly elder statesman. Only when Ellison probed him about the suspicious timing of the trades and the bugged conversation in his office did a bite creep into Anderson’s Scottish lilt. Many of the companies they invested in were long known to be M&A targets, he said. If they had access to price-sensitive information, why had they lost so much money on other trades?

And then there was Parvizi’s testimony. Jurors laughed as he explained how nothing he said could ever be taken at face value, because he was an incurable exaggerator—a habit he referred to as “adding VAT,” after the British sales tax, to his comments. I’ll give you an example, Parvizi told Ellison in a vicious tone: “You’re a very, very handsome man.” The courtroom roared. For the FCA investigators in the gallery, it was torture.

Only on the third day, when Ellison’s cross-examination began, did things appear to unravel. Parvizi’s defense was essentially that the entire market was built on bluster. He maintained he’d never known the basis of Hind’s information. In his world, he said, it was an unspoken rule never to ask the source of a tip. “In every rumor there is uncertainty,” he said, dismissing the idea that he was ever in receipt of a sure thing. But Parvizi also volunteered that he’d started a few rumors: He described phoning a Financial Times journalist to “plant the seed” about a potential bid for Sky and told how he’d made money on a penny stock by fabricating a story about a Malaysian businessman.

The judge abruptly stopped the proceedings and sent the jury out. Parvizi appeared to have admitted to making misleading statements—a criminal offense, but not one he was charged with. The judge advised Parvizi that he didn’t have to answer any further questions that might incriminate him. Parvizi was aghast. As far as he was concerned there was only one rule: Thou shalt not trade on what thou knowest to be inside information. When Ellison explained that there were quite a few other laws—a whole book of them, in fact—Parvizi began to flounder. “If everyone told the truth,” he said, looking around the courtroom for support, “the stock market would not move.”

The jury deliberated from April 25 to May 9. Hind read a textbook. Parvizi checked stock prices on his phone. He’d recently changed his WhatsApp profile picture to an image of two dice—one that read “guilty,” the other “not guilty.”

Finally the jury returned and read its verdict for each man in turn. The first two, Dodgson and Hind, were found guilty—and then Parvizi, Anderson, and Harrison were all acquitted. Harrison patted Dodgson’s shoulder, and Anderson squeezed Hind’s hand. Parvizi left immediately, without acknowledging his co-defendants, exiting the courtroom with a smile on his lips.

Three days later, Dodgson and Hind returned to be sentenced. Harrison came in support; at one point, returning from a break, he accidentally walked to his old seat in the dock. Dodgson’s and Hind’s lawyers offered mitigating circumstances—young children, drugs, divorce—but Judge Jeffrey Pegden wasn’t moved. Insider dealing is “not a victimless crime,” he said. Pegden gave Dodgson four and a half years, the longest-ever U.K. sentence for the crime, while Hind got three and a half. They were led out of the dock, Hind wheeling a large suitcase behind him.

At a press briefing, FCA investigators did their best to spin the outcome as a victory. Every conviction sends a message, they said. Three other men arrested in the related March 2010 raids had pleaded guilty, bringing their overall hit rate in the Tabernula probe to five out of eight.

The FSA and then FCA had devoted eight years and $20 million to the case—double the defendants’ alleged profits. And Parvizi and Anderson, whose uncanny trading had triggered the investigation, had walked free. Was it worth it? Cole, who has a new job as general counsel of PwC, thinks before answering. “Insider-trading cases will always be difficult,” she says. “They are time-consuming and expensive, and if you’re a smart City trader, you’re unlikely to leave a smoking gun. But it’s crucial that they stick with it.”

Regardless of his acquittal, the Mad Punter is likely done with the stock market. Before the verdict, during his testimony, Parvizi said that no trader would ever talk to him again. “I’m in court to tell the truth,” he said. “The game is up.”

Tuesday, June 28, 2016

The Perfect Cup of Coffee Costs $3,500

The Swiss-made Jura Z6 brews a killer cappuccino, just the way you want.


  • Key Details: An espresso machine that can make anything from a concentrated ristretto espresso to a multilayered latte macchiato at the touch of a button.
  • Competitors: Saeco Xelsis Evo ($2,999), DeLonghi PrimaDonna S De Luxe ($2,999)
  • Price: Starts at $3,500
  • Why It's Worth It: Because you can easily customize every aspect of your favorite drinks, your morning cappuccino can be perfect and easy.
Your day’s first cup of coffee, if you make it yourself, is something of a paradox. To do it right demands quality ingredients and equipment, as well as focus and precision—two qualities that most of us are lacking in those perilous pre-caffeinated, post-waking minutes. You could venture out into the world and get your name misspelled on a paper cup, but that is scarcely better. Enter the Jura Z6, which—in a very Swiss way—quickly, precisely, and yes, automatically makes almost any coffee drink to your exact specifications. You no longer need barista skills (or even pants) to get a perfect flat white.

The Jura even looks different from your typical espresso machine—its aluminum fascia is as sleek as a piece of modern architecture. The 2.4 liter (81 ounce) water tank, lit from beneath in cool blue light, stands like a slim appendage on the left side of the machine. Below the color screen is the bank of height-adjustable nozzles (also architecturally lit) that dispense espresso, water, milk, and foam into your mug.

On its way, the coffee and milk is touched by a whole lot of proprietary technology and with that, a whole lot of proprietary acronyms. Coffee beans, stored in a 10-oz. hopper on the machine’s top, are ground in a conical burr grinder before water in the I.W.S. (Intelligent Water System) flows through the I.P.B.A.S. (Intelligent Pre Brew Aroma System) and moistens it, allowing it to swell before brewing. 

A P.E.P. (Pulse Extraction Process) then pulses water through the ground espresso, rather than simply flowing steadily, a process that marginally extends the extraction time but makes for a more richly flavored shot with a more pronounced crema. This is often a weak spot for other machines in the category; the Jura Z6 gets it right.

The iPod-style wheel and button on the top of the machine offers 10 strengths and three temperatures. Likewise, milk and milk foam can each be set to any of 10 temperatures. 

Your drink can also be customized and labeled (and new ones created), so if you like your cappuccino with 2.5 ounces of extra-hot, extra-strong espresso and minimal foam, while your partner wants one that’s only 1.5 ounces of normal temperature, normal strength espresso, and extra foam, each can be easily set, labeled, and saved. The process is not all that different from those first few minutes spent with a brand new car, when you adjust your seats, steering wheel, and stereo to your exact specifications.

As simple and rewarding as it is to customize your coffee, the aspect of the Z6 you’ll probably come to love most is its speed. It took exactly 94.2 seconds from the time I powered on the machine until the moment I took a first sip of the cappuccino it made. And that included allowing for the machine to come to temperature, perform its startup rinse cycle, and grind the beans. You could probably cut that time in half for your second cup.  

Sure, $3,500 may seem like a lot for an espresso machine. But this is more than that: It’s a daily dose of caffeinated instant gratification, right when you need it most. You might even call it a bargain. 

Monday, June 27, 2016

Amazon Unveils Online Education Service for Teachers

Just ahead of the back-to-school season, Amazon is making a major foray into the education technology market for primary and secondary schools, a territory that Apple, Google and Microsoft have heavily staked out.

On Monday morning, Amazon said that it would introduce an online marketplace with tens of thousands of free lesson plans, worksheets and other instructional materials for teachers in late August or early September.

Called Amazon Inspire, the education site has features that may seem quite familiar to frequent Amazon shoppers. Search bar at the top of the page? Check. User reviews? Check. Star ratings for each product? Check.

By starting out with a free resources service for teachers, Amazon is establishing a foothold that could expand into a one-stop shopping marketplace — not just for paid learning materials, but for schools’ wider academic and institutional software needs, said Tory Patterson, co-founder of Owl Ventures, a venture capital fund that invests in ed tech start-ups.

“Amazon is very clearly positioning itself as a disrupter with this move,” Mr. Patterson said.

Amazon is joining other tech industry giants in an enormous push to expand the use of technology in the public schools.

Last year, primary and secondary schools in the United States spent $4.9 billion on tablet, laptop and desktop computers, according to a report by Linn Huang, a research director at the International Data Corporation, a market research firm known as IDC. Altogether, schools bought 10.8 million Apple, Google Chrome and Microsoft Windows devices in 2015, he said.

Because its devices tend to cost more, Apple accounted for the largest slice of school computer sales, amounting to $2.2 billion, Mr. Huang said. By volume, however, Chromebooks — the inexpensive laptops that run on Google Chrome operating systems — have taken schools by storm, accounting for more than five million devices bought last year, he said.

Even so, ed tech industry analysts said the growing market for digital educational materials, which Amazon is entering, is likely to prove much more valuable over time than the school computer market.

Already, nursery through high schools in the United States spend more than $8.3 billion annually on educational software and digital content, according to estimates from the Software and Information Industry Association, a trade group. That spending could grow significantly as school districts that now buy physical textbooks, assessment tests, professional development resources for teachers and administrative materials shift to digital systems.

In a phone interview, Rohit Agarwal, general manager of Amazon K-12 Education, said the new site was intended to make it easier and faster for teachers to pinpoint timely and relevant free resources for their classrooms.

“Every teacher should be able to use the platform with zero training,” Mr. Agarwal said. He added: “We are taking a big step forward to help the educator community make the digital classroom a reality.”

The site for teachers is not Amazon’s first education venture. In 2013, the company acquired TenMarks, a math instruction site. (Mr. Patterson of Owl Ventures is also a partner at Catamount Ventures, a firm that was an investor in TenMarks.)

In March, the New York City public schools, the largest school district in the country, awarded Amazon a three-year contract, worth an estimated $30 million, to provide e-books to its 1.1 million students.

In the school market, however, Amazon is competing not just with rival tech companies but with established digital education companies and ed tech start-ups.

A number of popular platforms already offer instructional materials for teachers. Among them are, a site based in London with more than eight million users worldwide, and, a site based in Manhattan that more than two million teachers use regularly.

Like Amazon Inspire, these sites let teachers search for materials by subject matter, like fractions or mitosis, and by grade level. Like Amazon Inspire, lets teachers download lessons and edit them to suit their students. (Some resources on may also be edited.)

Mr. Agarwal said the company’s new instructional resources site would be able to differentiate itself by being more intuitive for teachers who are Amazon users and by offering compelling new features.

“With the technology, content and expertise that Amazon has, we believed we could provide value,” he said.

Amazon timed its announcement to coincide with ISTE, the annual conference of the International Society for Technology in Education, which about 16,000 teachers and school officials are attending in Denver this week. Other tech giants also unveiled new education ventures during the conference.

On Sunday, Microsoft said that it was working with ISTE to help schools introduce and integrate technology in the classroom. The project includes training programs for school administrators, online leadership courses developed with edX — a learning platform created by Harvard and the Massachusetts Institute of Technology — and services to support schools as they adopt digital learning approaches.

Brexit: 5 ways will affect Tech firms

The UK public's decision to leave the European Union will impact technology firms operating within Britain in a variety of ways. Here's a breakdown for business and tech professionals.


The UK has voted to leave the EU, leaving British-based technology firms facing uncertainty over the impact on their business.

It will likely take the UK years to leave the EU. Britain is not expected to begin negotiating its withdrawal until October this year, and that will only be the start of at least two years of negotiations.

The decision to back Leave has various implications for the UK's tech industry and will affect firms' ability to employ non-UK workers, to access research grants, to bypass trade tariffs, and how they handle data.

1. Access to skills

Tech firms based in the UK routinely employ EU nationals, but Britain's decision to leave the EU has created uncertainty over whether the practice can continue after the UK brings in new immigration controls.

UK-based ARM, which designs the chips inside 95% of smartphones, is concerned about the impact on non-UK based workers.

"We will watch the negotiations closely, particularly on the subject of visas, as we employ approximately 200 non-UK EU citizens at our Cambridge headquarters," a spokesman said.

While there will be no immediate impact, there are no guarantees that EU workers will be able to continue living in the UK in the long run, according to an assessment by legal experts, who raised the likelihood that individuals would eventually need additional documentation to prove their right to remain.

The Corporate IT Forum (CITF)—the membership organisation for IT leaders at FTSE 250 organizations—is worried about how future recruitment difficulties could worsen existing skills shortages within the tech industry.

"For technology functions based in the UK, the particular concern is over shortages of IT skills and now the increased risk of much more difficult and more costly recruitment of IT professionals from the EU," said Joanna Poplawska, executive director of the CITF.

The British government is facing similar appeals to keep the country open to EU talent from multinationals who operate out of the UK.

"We call on the UK government to adopt a stance in forthcoming negotiations aimed at ensuring that the country's economy remains successful, open, competitive and innovative," said a spokesperson for IBM.

2. Availability of funding for startups

The UK has a large and vibrant community of tech startups, many of which are based in East London.

The venture capital that helped many of these companies to get off the ground, and that also attracted EU startups to move to the British capital, could now be under threat, by some estimates.

Jon Moulton, founder of private equity firm Better Capital, told The Financial Times that the Luxembourg-based European Investment Fund is the largest investor in UK venture capital firms and warned the European fund "would probably stop investing in the UK" if Britain left the EU.

Ahead of the referendum vote, none of the UK startups that have grown into unicorns, private companies with a valuation above $1bn, supported Britain leaving the EU.

3. New trade tariffs

A new EU-UK trade deal is expected to take years to agree, with the Leave campaign saying it wants a new deal to be in place by 2020.

Once the UK has left Europe and until a new deal is struck, the UK would trade with the EU under World Trade Organization rules. These rules would see UK exporters paying new EU import tariffs, as well as facing other fresh barriers to trade. The UK would also have to renegotiate the more than 50 free trade deals the EU has with countries ranging from Canada to South Korea.

However, the impact on UK-based tech firms will obviously be dependent on which regions of the world they do business with.

"Brexit will not have a significant impact on our business as almost all of our earnings come from outside the EU zone," said chip designer ARM.

Those campaigning for Leave claimed that exporters could be compensated for the additional tariffs by the UK government, using money saved on not paying EU membership fees.

4. No more EU research grants

The EU funds research grants within British institutions and companies, some of which are technology firms.

Between 2007 and 2013 the EU funded nearly £7bn worth of research. Once British contributions to this funding are taken into account, this worked out as a net gain of about £300m a year for the UK.

ARM is among those tech firms that expects to lose EU research money as a result of Britain leaving the EU, although it is hopeful that the UK could meet the shortfall.

"We may lose some EU research grants but these have represented less than one percent of our R&D spend in the last three years and we hope to see this picked up by the UK government," a spokesman said.

5. Uncertainty over handling data

A questions mark now sits over how tech firms should handle from UK firms and citizens: How they process it and where it can be stored.

The EU is currently in the process of negotiating a new deal for the transatlantic transfer of personal data, under the EU-US Safe Harbor agreement, Privacy Shield. Meanwhile, firms operating in EU member states have until June 2018 to comply with the new General Data Protection Regulation (GDPR), which sets out far-reaching changes to how organizations handle personal data.

Firms operating in the UK will be bound by these regulations and agreements, at least for the foreseeable future, according to data governance and risk specialist DQM GRC.

"In my view the long term impact of a 'Brexit' on the legislative framework for privacy will probably not be hugely significant," said Peter Galdies, development director at DQM GRC.

He said the process of leaving the EU was unlikely to begin until at least October this year, and that this would only be the start of drawn-out negotiations.

"There will be a mandatory two-year minimum period in which we remain a member of the EU whilst we negotiate an exit. During this time all existing legislation, including GDPR, will continue as before.

"Many forecast that this process might take much longer, with many estimates between three and six years," said Galdies, adding: "The pressure to negotiate a strong trade deal with the EU will also drive the adoption of "mirroring" legislation—designed to minimise the barriers to continued trade."

The Corporate IT Forum's Poplawska called on the government to move quickly to clarify how companies operating in the UK should proceed with regards to data handling.

"Our members will have many questions that will need to be answered—for example, where we stand with data protection as the EU General Data Protection Regulation was passed recently after four years of negotiations and is due to be implemented across the EU in 2018," Poplawska said.

Multinationals operating out of the UK are also keen to not see new barriers to the free movement of data between UK and EU countries.

"We also encourage leaders throughout Europe to preserve cross-border data flows that drive growth and innovation, and that underpin the worldwide digital economy," an IBM spokesman said.

Thursday, June 23, 2016

This Funky New Turbine ...

...Can Bring Green Energy to Rural Areas

Image result for Ice Wind Turbine
IceWind modernized ancient Persian technology with new materials and engineering...

Iceland may be a cold, hard place to live, but the locals sure have made the most of what they’ve got. The country runs on 100 percent renewable energy, thanks to its geothermal pockets and hydroelectric dams.

Hello World’s Ashlee Vance paid a visit to the capital city of Reykjavik to see the next part of the green energy story. He found a startup called IceWind that has designed a wind turbine to perform well in low-wind conditions but also to slow itself in high winds to prevent it from catching on fire or ripping apart.

Today the turbine is used to power the remote summer homes so popular in Iceland and industrial equipment, such as telecommunications gear, that dots the highways. By the end of the year, IceWind expects to export its turbines for use in rural areas throughout the world.

Tuesday, June 21, 2016

‘OPEC Is Finished’

An Iranian professor said Tuesday that the Organization of Petroleum Exporting Countries (OPEC) is doomed, because of power struggles between Iran and Saudi Arabia that have created serious political fallout.

“OPEC’s power is not waning — I’m sorry, OPEC is finished,” Hossein Askari, an Iranian professor of business at George Washington University who studies the oil industry, told USA Today. “OPEC is just powerless. They cannot agree to anything, both for political reasons and economic realities.”

Saudi Arabia has kept oil prices low to hurt Iran, causing prices to remain low since mid-2014. Iran hasn’t produced much oil recently after seriously investing in its oil sector for years due to sanctions. Simply restoring previous oil production levels is estimated to require a minimum $150 billion of new investment and could cost Iran up to $500 billion over the next five years, according to reports by the country’s state-run news agency. Iran desperately needs the kind of quick cash that only selling oil on the global market can provide.

Since Saudi Arabia refused to slash production at a critical OPEC meeting last November, the price of oil has plunged and is currently below $50 per barrel. These low prices and lack of coordination between the countries weakens OPEC’s power as a cartel.

Conflict between the major oil producers of Saudi Arabia and Iran is escalating, as the Saudis banned ships carrying Iranian crude oil from entering the country’s waters or utilizing its infrastructure in April. The ban has escalated the conflict between the countries and made Iran even more unwilling to cooperate. The Saudi’s have even threatened to increase production by up to a million barrels a day which would vastly lower the price of oil simply to hurt Iran.

So far, OPEC’s power is weakening because Russia has supported Iran’s position, likely to protect its political interests elsewhere. “Iran has a special situation as the country is at its lowest levels of production. So I think, it might be approached individually, with a separate solution,” Aleksander Novak, Russia’s energy minister, told the state media company Russia Today in March.

However, this will only work to a point. If the Saudis continue increasing oil production to keep the prices low, it could be devastating to Russia. Low oil prices caused the Russian economy to contract by 3.7 percent in 2015. Russia’s economy will keep shrinking unless oil prices recover to at least $80 per barrel, according to the Energy Research Institute of the Russian Academy of Sciences.

Saudi Arabia can increase production because it can likely handle cheap oil better than other OPEC countries, but even it is expecting a budget deficit of $140 billion — roughly 20 percent of the Saudi economy. When compared to 2013’s surplus of $48 billion, the fiscal outlook for the Kingdom looks so dire that the International Monetary Fund warned it could go through its fiscal reserves within five years. Saudi oil export revenues dropped 46 percent in just the last year and the country is selling bonds for the first time since 2007.

Saudi Arabia and Iran have a long-running rivalry, with its roots in religion. Saudi Arabia is a Sunni Islam country, whereas Iran is the home of Shia Islam. The two countries have been engaged in proxy power struggles over the last year, but the Saudi execution of a popular cleric in January immeasurably worsened diplomatic relations.

Cheap oil is good news for America and other net oil importers, especially for the poorest members of society who spend a larger proportion of their incomes buying oil products.