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

Mr Urra said he became less enthusiastic about the Information Discovery Strategy and decreased the number of times he used it as the Relevant Period went on. Mr Sheth’s evidence was similarly that he had tried the strategy intensively over three weeks in June 2016, with further attempts in July. He believed it could work, but lost interest as it was not working.

The majority of the Instances relied upon by the Authority against Mr Urra and Mr Sheth were in June 2016. Mr George and Mr Bailin both submitted that this pattern is consistent with a trading strategy that proved ineffective in June and was used less frequently in July; it was inconsistent with a market abuse scheme that supposedly worked well in June but was then used less in July.

The Tribunal has found that 179 of the 233 Instances occurred in June 2016 and the remaining 54 in July 2016. The evidence in relation to the activity of Mr Urra and Mr Sheth was not presented on an equivalent basis – 74.2% of the Instances on which the Authority relied against Mr Urra were in June 2016, with 25.8% in July 2016 (and these involved Mr Urra placing 96 and 39 Large Orders respectively); Mr Sheth placed 184 out of 202 large orders (this including both Large Orders and Non-Instance large orders) in June 2016 (with the first Large Order placed by Mr Sheth being in F36 on 13 June 2016), although the split between the number of Instances relied upon against him is less stark.

Mr George referred to the split between Electronic RFQs and cash bond trades, whereas Mr Shivji drew attention to the total number of traded lots each month. The data included:

It can be seen that there was a clear difference between the level of market activity in June and July. Mr Creaturo reminded the Tribunal that June is half-year end and very active, whereas July is the beginning of the summer period and the number of trades and volumes drop off at this time.

The Tribunal is not persuaded by Mr George’s and Mr Bailin’s submissions that the occurrence of these Instances supports a conclusion this was a legitimate strategy that was not working, and considers the position to be neutral. There was a reduction in all activity in July 2016 compared to June 2016, whether in the market as a whole or for the Desk, and there are still Instances throughout July 2016 involving Mr Urra and/or Mr Sheth (with the focus on whether Mr Sheth placed Large Orders in those Instances being somewhat distortive, as it is the Authority’s case that the Traders were involved in an Instance if they had placed the Small Order that was opposite the Large Order), and looking at the list of Instances relied upon by the Authority it is clear that all three Traders were involved in the activity even in the last week in July, up to and including 28 July 2016.