UT (Tax & Chancery) UT-2022-000134 UT-2022-000135 UT-2022-000137 - [2025] UKUT 00214 (TCC)

We assess the plausibility of this strategy, which Mr Urra and Mr Sheth both say they were pursuing, albeit that Mr Urra was said to have devised it, Mr Sheth says he pursued it as he had been shown it by his manager (which Mr Bailin submitted was, for Mr Sheth, more significant than its plausibility given his junior status) and which, in closing submissions, Mr George and Mr Bailin submitted were “similar” to each other without providing any clarification as to how they differed. We also refer to the Mandate here in the light of our conclusions as to the strategy, as the Authority’s submissions on the Mandate (essentially that the strategy was outwith its permitted scope) formed part of its submissions that the strategy was not being pursued.

We have set out above Mr Urra’s explanation of the Information Discovery Strategy, including the problems it was seeking to address (MHI’s information disadvantage and clients splitting orders) and its intended benefits (information as to whether clients are splitting orders, which could be obtained both if a Large Order filled and if it did not, and a profitable position for MHI if the Large Order filled), as well as Mr Sheth’s explanation of his understanding of that strategy.

The Tribunal finds as fact that Mr Urra had placed an uniceberged order to buy 450 lots of Futures on 12 May 2016, that this order filled and that he told Mr Sheth about this at or around that time. We make this finding on the basis of the data presented by Mr Sheth in his witness statement, which was not challenged by Mr Shivji.

The Tribunal also accepts that MHI’s status as a third-tier market maker meant it had an information disadvantage compared to larger, top-tier, market makers based on the agreed fact that it had less visibility over client flows in the market, receiving fewer RFQs and RFQs of smaller sizes than larger market makers. We accept, as did Mr Creaturo, that the Desk would be seeking to improve its position in this regard.