Jail for stockbroker after illegal trading is exposed

Jonathan Bunn guilty of
false accounting

A City stockbroker whose illegal trading left his company having to buy back £42 million of bank shares has today (July 1st) been sentenced to two-and-a-half years in prison at Southwark Crown Court.

Jonathan Bunn, from Weybridge, was arrested by the City of London Police in November and in May this year pleaded guilty to four charges of false accounting. The investigation into the 31-year-old was launched after his employers, Lewis Charles Securities (LSC), uncovered massive irregularities in his trading on their Inter Dealer Broker Desk.

Bunn was hired in March 2009 to trade by matching buyers and sellers of securities - but was not allowed to use the firms own capital for trading. Up until June last year the economics graduate steadily increased his customer base, sales output and salary. But over the course of two days in July he made a number of unauthorised sales, leaving the stockbroker’s unknowingly holding a short position of more than 4 million HSBC shares.

To try and hide the deal he submitted four fraudulent share purchase slips, using his trading name ‘Sticky’  to the back-office to give the illusion the sales had been matched by buyers, and he was not exposed to price movements on the bank shares. However, the following day Bunn did not turn up for work and the counterparties registered on the buy slips reported they had played no part in the transactions.

On his manager’s request Bunn emailed the names of the traders he had worked with on the deals, and then proceeded to make his situation even worse by increasing the short position to almost 7 million shares.
When LSC confirmed the hedge fund linked to the purchase deal slips did not employ a broker with the name provided Bunn was simultaneously sending a text message to his senior management confirming the trades were fictitious, saying: “It is a position. I’m sorry and I did not realise how serious it is.”

Later that day the short position was closed with LSC buying back the 7 million HSBC shares at close to £6 each. Due to the rise in the share prices the brokers were left with a loss of £2.67 million. The FSA were notified of Bunn’s activities and shortly afterwards referred the matter to the City of London Police, who immediately launched a criminal investigation. In November 2009 detectives arrested the trader at his Weybridge home.

DS Simon Russen, from the City of London Police’s Economic Crime Directorate, said: “This was an experienced trader who breached the trust of his employer. But for their prompt reactions, this reckless dealing could have ruined their business."

“A sentence of this size will hopefully be a deterrent to anyone else who considers embarking on such high risk gambling with someone else’s money."

“This is a good example of the close working relationship that the COLP has with the FSA and with their quick referral, it created a platform for a successful prosecution.”

For further information please contact Harry Watkinson at the City of London Police Press Office on 020 7601 2220, or email media@cityoflondon.police.uk.