'Mad Punter' used journalists to beat stock market

Iraj Parvizi read into journalists' conversations to understand which stories were likely to make news

One of the traders on trial in the UK's biggest ever insider trading probe said he spoke to journalists at the Financial Times and Daily Mail newspapers to try to get clues on what they would be publishing the following day.

Iraj Parvizi, 50, who is known in gambling circles as "the Mad Punter" due to his willingness to wager on anything, told the jury that his most successful strategy involved calling his sources at the British papers and trying to figure out what they were working on.

"The way it works is, I need information, they need information," Parvizi explained on his first day testifying in a London courtroom. "If I bought today and the Mail writes something tomorrow, the share price goes up 2 per cent to 5 per cent." He said he could tell from the discussions they had and what they were asking what they were likely to print.

"Our journalists do not offer 'tips' to sources or market participants," said Financial Times spokesperson Kristina Eriksson. "Such activity would be illegal." Parvizi said he read into journalists' conversations to understand which stories were likely to make the news, she said. Daily Mail spokesperson Oliver Lloyd said it would be inappropriate for the newspaper to comment during the trial.

The Financial Conduct Authority's prosecution of Parvizi and four others, including former Deutsche Bank AG managing director Martyn Dodgson, is the largest and most complicated insider-trading trial ever held in the UK The FCA alleges that Dodgson and Andrew "Grant" Harrison, an ex-stockbroker at Panmure Gordon & Co, passed price sensitive information to accountant Andrew Hind, who gave it to Parvizi and day trader Benjamin Anderson.

Parvizi named Paul Murphy and Neil Hume, who worked on the FT's Alphaville service, as well as the Daily Mail's markets reporter Geoff Foster as his closest contacts. Asked whether he deliberately spread misleading rumours, Parvizi replied: "Definitely, yes," adding "I was there to help myself."

"Whichever journalist you're talking to, you get a feel," Parvizi said. If the reporter says there's a suggestion that a private equity company is sniffing around a certain company, "you know there's a story coming out."

Dressed in an untucked white shirt and jeans, Parvizi explained how he had gone from working in a kebab shop in his early twenties to being one of the biggest names in the stock market, buying racehorses and dividing his time between Los Angeles, Dubai and Spain.

"I was the king of penny stocks," Parvizi said, adding that his net worth in 2000 was between £50 million and £70 million ($70 million to $98 million).

The FCA's prosecution, which the regulator calls Operation Tabernula, centres on trades between 2006 and 2010 in stocks including Sky and Legal & General Group. The maximum penalty for insider trading in the UK is seven years in prison.

Parvizi said he bought and sold millions of pounds of shares daily but never kept any records because he relied on those he traded with to keep notes.