Visitors walk up a staircase as a logo sits on a sign in the reception area of the Financial Conduct Authority
Reception area of the Financial Conduct Authority © Bloomberg

A former investment portfolio manager at BlackRock has been charged by the financial watchdog with insider trading after a three-year investigation spanning the UK and Switzerland.

Mark Lyttleton, who previously ran a £2bn fund for the asset manager’s UK unit, has been charged with three counts of insider dealing between October and December 2011, relating “to trading in equities and a call option”, the UK’s Financial Conduct Authority said on Thursday in a statement.

Mr Lyttleton was first arrested in 2013, along with his wife Delphine. Swiss authorities also searched properties in Switzerland at the time. No other individual was charged on Thursday and Mrs Lyttleton was dropped from the FCA’s inquiries early last year.

The Financial Times previously reported that the FCA was investigating whether Mr Lyttleton gleaned confidential information on mining stocks from his job at the asset manager that he then used to trade on his own account through a broker in Switzerland.

Mr Lyttleton’s solicitor, Monty Raphael QC, declined to comment on behalf of his client, who attended the City of London Magistrates’ Court — just half a mile from BlackRock’s offices — on Thursday.

The charge of insider dealing is a fall from grace for the former fund manager, who was a 21-year veteran of BlackRock. Mr Lyttleton was one of its biggest stars in the last decade, winning kudos for managing its UK Dynamic and Absolute Alpha portfolios. The latter topped the Cofunds’ bestseller list for June 2008 and its assets swelled from £300m to £1.4bn in just over a year.

But the funds struggled after the financial crisis, and UK Dynamic was singled out as a “dog” by financial advisers Bestinvest in 2011.

He had left BlackRock before his arrest in 2013 for reasons unrelated to the investigation, the asset manager said at the time.

Insider trading carries a maximum seven-year jail sentence in the UK. The financial regulator and its predecessor had never criminally prosecuted insider trading before 2008, but since then have built up a steady stream of successes against evermore sophisticated targets, culminating in the high-profile trial of five defendants earlier this year following the eight-year investigation dubbed Tabernula.

Two men, including a former managing director at Deutsche Bank, were convicted but three were acquitted.

Tabernula was the first big trial of insider trading in nearly four years, as the regulator’s resources were diverted away from such investigations to the sprawling probes into the rigging of Libor and foreign-exchange benchmarks.

Earlier this summer, the FCA revealed that abnormal movements in share prices ahead of public takeover announcements were at their highest level in five years – a possible side-effect of a dearth of big cases, which the regulator has said have a deterrent effect on would-be insider traders.

BlackRock said in a statement that the charges related “to alleged actions carried out in 2011 for his personal gain, while off our premises, and that neither BlackRock nor any employee was under investigation. There was no impact to any of BlackRock’s clients as a result of the alleged actions. The alleged behaviour is totally contrary to the firm’s principles and values, and we strongly support aggressive enforcement of the law in these matters”.

Additional reporting by Madison Marriage in London

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