First Foray into Trading and Seminars

Credit: Reuters

My first investment into shares was on 27th of January 2010. For the year 2010 I have made a 36.19% Return on Investment so far.

1st Trade - Initiated and closed over a few months

Bought 908 of Barclays PLC - Ord 25 / at £2.73

Sold 908 of Barclays PLC - Ord 25 / at £3.60

Profit £813.79 (inclusive of Stamp Duty and Commission)

I traded at my own risk and taught myself the markets. I didn't rely on seminars by self-righteous Trading Gurus. Anton Kriel of BBC's Million Dollar Traders fame is offering 2 day seminars on trading which can apparently turn you into a 'lean, mean trading machine'. The cost to attend is more than £2000.

In my experience trading is about strong research, trusting yourself and cutting your losses, and these elements are best self-taught.

Insider Trading - White Collar Crime

Market Manipulation is still a crime - Credit: LegalMatch

Being an active trader on the London Stock Exchange, white collar crime and the offence of insider trading in particular are areas of personal interest. I recently came across an interesting case on Insider Trading (or dealing). In his book Stock Market Efficiency - Market Abuse, Paul Barnes details the case of Insider Dealing with a tip off related to Lord Alan Sugar's Company Viglen in 2000.

I have written a quick overview:

During this pre-dot com boom era a tip off was received by the Daily Mirror that Viglen was on the verge of venturing into selling it's products online. The Mirror published this in it's City Slickers Column, following with Viglen experienced a significant rise in its share price.

The day before the tip was received Piers Morgan, the then editor of the Mirror purchased £67,000 worth of Viglen shares. Investigating Viglen's booming share price the London Stock Exchange forwarded the matter to the DTI (Department for Trade & Industry) who considered whether there had been a breach of Insider Trading statue.

The investigation showed there had been Insider Trading conducted by Hipwell, Bhoryul and Shephard. The DTI's view was that the tip was a 'deliberate act of manipulating the market by ramping the share price from which they were able to profit.' (DTI, 2001).

Hipwell and Bhoyrul were sacked from the Daily Mirror for gross misconduct and the Press Complaints Commission criticised the actions of all three as well as Piers Morgan. Hipwell, Bhoryul and Shephard were charged with Consipiracy under s1(1) Criminal Law Act 1977 to contravene s.47(2) Financial Services Act 1986. This is only one of the few convictions for Insider Trading in England and Wales. The DTI did not pursue Piers Morgan for Insider Trading.

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I have outlined the majority of the current Insider Trading offences below.

There are two approaches to I.D. in UK Law:

1) Old approach - Insider Trading is a Narrow Offense

Pre 1989 EC Directive: 1980 CA and 1985 Companies Securities Act (inspired by US I.D. law)

Classical Theory of liability= founded on the insider’s fiduciary duty to company

...to disclose the information to the counter party... or not pursue dealing

Or with respect to passing inside information to another (tippee)... in breach of fiduciary duty to the company...

and where the tippee knows or should know that there has been a breach of fiduciary duty... thus the tippee is also affected by the same trusts as the insider.

Individual must have a fiduciary relationship to the company (usually only including Directors)

Directors owe a fiduciary duty to company as a whole...

2) Contemporary Approach - Insider Trading is a Wider Offense

Post 1989: 89/592/EEC & CJA 1993:

Fiduciary duty not a prerequisite

By managing I.D. (issue of CAPITAL MARKETS) with the provisions on I.D. it is clear that UK company law (with emphasis on fiduciary duty to the company) has migrated to securities law.

UK law on I.D. à Governed by: CJA 1993

- Influenced by EC Directive 89/592/EEC

- Designed to coordinate regulations in the EU on insider trading amongst member states (many of which didn’t have laws regarding it)

Outline of offenses

s.52 (1)

Insiders dealing in “price-affected” securities using “inside information”

Elements of the offense:

· Offense must be committed by an individual

· Individual must have information as an “insider”

· Individual must “deal”

· In “price-affected securities”

· “In relation to the information”

· As per s.52 (3) acquisition/disposal on the regulated market – dealing themselves/ professional intermediary...

Two Inchoate I.D. offenses

s.52 (2) (a) Insiders Encouraging others to deal in price-affected securities

Encouraging

· Offense must be committed by an individual

· Individual must have information as an “insider”

· Encourage another to “deal”

· In “price-affected securities”

· “In relation to the information”

· Knowing/having reasonable cause to believe the dealing would take place... As per s.52 (3) acquisition/disposal on the regulated market – dealing themselves/professional intermediary...

s.52 (2) (b) Insiders Disclosing the information to another person

Disclosing

· Offense must be committed by an individual

· Individual must have information as an “insider”

· Discloses it to another – other than in the functions of his employment

· In “price-affected securities”

· “In relation to the information”

Disclosing Offense(s)

s.52 (1)

Dealing in the price-affected securities

s.52 (2) (a)

Encouraging another to deal in the price-affected securities

s.52 (2) (b) + s.52 (3)

Disclosing information

Ministry of Justice - Reforms 2010

The Ministry of Justice Business Plan 2011-2015 makes for interesting reading. As Michael Howard said in 1993, 'Prison works'. Based on this report, this doesn't seem to be the Coalition's message. The Coalition's is focused on lowering prison numbers, whether that is done by giving more power to Judges on sentencing or with developing rehabilitation initiatives, to lower the offending rates of detainees once they leave prison.

Whilst this approach may be logical and more efficient in its conception, the cost cutting motivations behind this new direction of the Ministry of Justice are questionable. It is the reduction in funding for the Ministry, which has initiated these new measures, which the Coalition hope lower Prison numbers, thereby saving the Department a considerable amount (in light of the fact that the average cost per prisoner place is above £30,000).

Whether this is sustainable in the long term remains to be seen.

WikiLeaks, Allegations & EU Law

As a prelude to this post I must disclose that I am a neutral party. I do not favour Mr Assange as 'a messiah' for his WikiLeaks publications, in fact I disagree with his views that all of what is said by government (however irrelevant) behind closed doors, needs to be transparent. How can we as UK Citizens and Members of the EU really have purport to have 'free speech' per say when we are encumbered with restrictions on what can be said, on Radio, TV, in person and with what is published in the Media. Whilst I agree that this is in the protection of reputations, all we have is 'constrained free speech'.

Pictured: Julian Assange - More Leaks than a Plumber could fix - Courtesy: Gaurdian.co.uk

Not only has Mr Assange's activities brought into question the issue of "Free Speech" (notably a right not clearly formalised within the UK Constitution) but it has also called the functioning of the EU's Law Enforcement Procedures into doubt.

We are all aware of the ongoing saga surrounding the WikiLeaks founder Mr. Julian Assange. Currently being held at Wandsworth Prison, Mr. Assange is facing extradition to Sweden as a result of the European Arrest Warrant (EAW) issued against him. A tool of the Judiciary the EAW introduced in 2004 allows EU Member States to enforce their national laws. If an individual is charged with an offence or is serving a Prison sentence in a Member State and flees the country, the State's Courts can issue an EAW. This calls for the arrest of the individual in question within the EU member states, so that the person in question can return either to face the charge, being put on trial or returning to complete the remainder of a prison sentence.

Mr Assange has yet to be formally charged with rape, it remains as an allegation. So this clear misuse of the EAW has meant Mr Assange is being held in detention (for an unclear amount of time) without charge. Mark Stephens, the lawyer acting for Mr Assange has outlined that up til now that his client has complied Swedish authorities in this rape claim allegation, but yet no charge was ever brought forward. Guilty before being proven innocent?.

Is this simply a manhunt? brought on by the recent WikiLeaks US Diplomatic Cables publications? Or a just and fair EAW, issued as a result of evidence against Mr Assange in the rape claims?

The issuing of the arrest warrant without any clear grounds is clearly a misuse of its purpose. Sweden should have undertaken further investigations into these allegations before issuing the EAW. This suggested alternative would have been a more proportional action, and by implication the actions of Sweden are in breach of the EU principle of proportionality.

The EU should impose stricter regulations on the circumstances with which issuing EAWs can be authorised, with non-complying member states facing punishment. Alternatively as any UKIP supporter would agree the UK could to reconsider its position within the EU, or at the very least raise this as a point of contention .

Undoubtedly pressure from America caused the issuing of the EAW with such haste following the Cables revelations.

But only time will tell.... and maybe another WikiLeaks publication no doubt.

Update

Mr Assange's claim for Bail is being heard at Westminister Magistrates Court with a reported hefty £240,000 for bail. this is before he is case for extradition to Sweden is to be heard. His lawyer Mr. Stephen Hunt has described the 'Dickensian Conditions' Mr Assange has endured at Wandsworth Prison where he has been held.

Pictured: Wandsworth Prison - Maybe Sweden isn't so bad after all? Source: Click me

Public Law - Parliamentary Supremacy Skeleton Arguement

A skeleton arguement for a situation between two fictional Statues. The Representation Candidature Act 2006 (RCA 06) and Electoral Reform Act 2009 (ERA 09). The ERA 09 conflicting with the RCA 06, with no clear express repeal of the ERA 09.

This raises a question of the ERA's validity. Furthermore the RCA 06 provides for a majority for the Act to be expressly repealed. A skeleton argument for a moot was prepared.

24^th November 2010

IN THE COURT OF APPEAL

Between:

_____________________________________________________________

R (on the application of Keene) Appellant

-and-

SSJ Respondent

______________________________________________________________

Skeleton Arguement on Behalf of the Respondent (SSHD)

Facts

· Mr Keene has lived in West Loamshire since only 2008

· Wants to stand as a Candidate for the Parliamentary Election

Keene would be entitled to stand by virtue of s.12 Representation Candidature Act 2006, pre-dating the ERA which states that a candidate can stand for an election who had residency for no less than two years.

· Informed of in illegibility to stand as he didn’t fulfil residence requirements as per s.1 Electoral Registration Act 2009 (ERA 2009). The ERA outlined those wishing to stand as a candidate must have lived in their respective constituency for at least 5 years prior to an Election.

· Keene brought claim for Judicial Review against Secretary of State for Justice (SSJ) arguing that ERA 2009 = invalid... thus entitled to stand as a candidate as per s.12 RCA.

· Claim dismissed on 1^st instance by Court who found that s.1 ERA prevailed.

Respondant Submissions

1) Following the cases of: Edinburgh & Dalkeith Railway Co v Wauchope as confirmed in the following case of:Pickin v British Railways Board. There is clear precedent that the Courts are not permitted to question the validity of a statute, or hold that an Act. This is the ‘enrolled act rule’. With regard to this rule, the fact that the House of Commons lacked a 75% majority when voting for the Act is inconsequential and the validity of the case shouldn’t be in question.

2) As per Ellen Street Estates Ltd v Minister of Health Parliament previous acts of Parliament cannot bind its successor

3) There is no indication that the RCA 2006 was expressly repealed, as per s.35 RCA 2006 the 75% majorities required for a repeal/amendments for the Act were not reached. Hence, implied repeal could applicable in this scenario as the ERA 2009 proceeded the earlier RCA 2006. Following Ellen Street Estates v Minister of Healthin this situation the later ERA 2009 should impliedly repeal the earlier and contradicting an RCA 2006. There are limits which apply to the doctrine of implied repeal. As per Thoburn v Sunderland City Council a statue of constitutional (as opposed to an ordinary statue) importance can only be repealed expressly. Applying Laws LJ’s test for a constitutional statute:

1. The statute must condition the legal relationship between citizen and state in some general, overarching manner; or

2. The statute must change the scope of fundamental constitutional rights.

The RCA does not meet Laws LJ’s test for a constitutional stature due to (i) the limited manner in which it changes the relationship between citizen and state and (ii) its leaving constitutional rights unchanged, thus the 2006 Act can be impliedly repealed.

Validity of the Electoral Registration Act (ERA) 2009

4. Any argument that the ERA is invalid as it was enacted contrary to the provisions of Section 35(1) of the RCA is rejected. It is a tenet of the British Constitution that a later Parliament cannot be bound by any of its predecessors. The authority for this is Ellen Street Estates v Minister of Health [1934] KB 690. To allow the provision of Section 35(1) to stand would destroy the supremacy of Parliament. It is suggested in R (Jackson) v Attorney General [2005] UKHL 56 that if an Act of Parliament offends against the constitution, the courts could be bound to strike it out. The provisions of Section 35(1) of the RCA are entirely unconstitutional and should be struck out.

Status of the ERA

5. It has been suggested in R (Jackson) v Attorney General [2005] UKHL 56 that a constitutional statute might require a super-majority for repeal, as in Section 35(1) of the RCA. For the reasons outlined in above, this does not apply to the RCA, which is not a constitutional statute.

6. For the reasons outlined above the Respondent asks the court to deny the application.

Counsel for the Respondent, 25^h November 2010