Former BlackRock Manager Pleads Guilty to Insider Trading

(Bloomberg) -- Mark Lyttleton, a former BlackRock Inc. portfolio manager, pleaded guilty to two counts of insider trading, becoming the latest high-profile figure snared in the U.K. regulator's crackdown on the crime.

Lyttleton entered his plea Wednesday in a London court after a third count was dropped. He was accused by the U.K. Financial Conduct Authority of insider dealing relating to trading in shares of EnCore Oil Plc in October 2011 ahead of news about a proposed takeover and, a month later, call options in Cairn Energy Plc related to the discovery of oil in Greenland.

Lyttleton was arrested along with his wife Delphine at their west London home in May 2013. The ex-portfolio manager, who was based in BlackRock's London office, ran funds including the BlackRock U.K. Dynamic Fund and the BlackRock U.K. Absolute Alpha Fund, once overseeing as much as 2 billion pounds ($2.45 billion). His wife was dropped from the FCA investigation last year.

The FCA has prosecuted a number of figures from London's top financial institutions for insider trading in recent years. In 2016 alone, a former equities trader at Schroders Plc was given two years in prison after pleading guilty to the offense, while a record 4 1/2 year prison term was handed to ex-Deutsche Bank AG corporate broker Martyn Dodgson in May.

Psychological Report

Lyttleton's barrister, Patrick Gibbs, said a psychological report would be submitted to the court ahead of sentencing to give some insight into his "rather extraordinary behavior." Unusually, Gibbs also said Lyttleton will voluntarily pay an undisclosed financial penalty rather than going through confiscation proceedings in the courts.

The 45-year-old wore a dark suit, blue tie and white shirt in the dock, staring straight ahead and speaking only to enter his plea. He was released on bail until his Dec. 21 sentencing and is permitted to travel to Monaco and France where his young children live.

“Your pleas at this early stage will be taken into account to your advantage,” Judge Anthony Leonard said in court. Insider dealing carries a maximum prison term of seven years.

Defendants can receive up to one third off their sentence for pleading guilty. More credit is usually given if the admission is made at an early stage in the prosecution process as it avoids trial preparation costs.

Highs and Lows

According to Lyttleton's LinkedIn page, he is now a personal coach, mentor and angel investor.

"I have experienced many highs (excelling at work) and lows (being arrested) and the understanding I try to share can be beneficial to people in all positions, in all walks of life," he says in a summary on the social media profile.

BlackRock said previously the trades were carried out "for his personal gain, while off our premises, and that neither BlackRock, nor any employee, was under investigation."

Lyttleton began investing as a boy when he entered the Daily Telegraph's stock-picking competition in 1978. He won by selecting Siebens Oil & Gas Ltd., that year's best performer. He was encouraged to enter by his father, who worked in finance, and picked the stock by pure chance, he said in a 2009 interview.

After studying chemistry at York University he started a career in finance at Mercury Asset Management Group Plc. Merrill Lynch & Co. acquired Mercury in 1997 and then sold it to BlackRock for $9.4 billion in 2006.

The FCA and its predecessor have secured 31 convictions for insider dealing since their first prosecution in 2009.

To contact the reporter on this story: Suzi Ring in London at sring5@bloomberg.net. To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser