Ex-UBS Official Guilty in Case of Burner Phones and Bubbly

(Bloomberg) -- A former UBS Group AG compliance officer and a friend were convicted of insider trading following an eight-week trial that featured accounts of champagne-fueled parties, burner phones and evidence stashed in a Chanel handbag.

A London jury found ex-UBS employee Fabiana Abdel-Malek, 36, and day trader Walid Choucair, 40, guilty of all five counts of insider trading, with the final verdict released Thursday. Abdel-Malek was accused by the Financial Conduct Authority of passing tips from confidential UBS databases to Choucair, who would use the data within minutes.

The FCA had a lot riding on the case, its first prosecution in 2 1/2 years. Lawyers presented details of lavish nights out in one of London’s most exclusive nightclubs, and a network of secretive traders who only spoke on burner phones. The FCA compiled a detailed timeline of the communication and movements of Abdel-Malek and Choucair, but didn’t present evidence that Abdel-Malek profited from the relationship.

The defense accepted most parts of the prosecution’s case: that Abdel-Malek looked the deals up, that she texted him from her desk and that he traded the same stocks she was looking up. But Abdel-Malek and Choucair fiercely disputed what they discussed as well as denying that they met at times when the prosecution alleged Abdel-Malek told him about deals.

After some of the verdicts were announced in court Tuesday, Abdel-Malek broke down in tears. Choucair, standing next to her in a hoodie and faded jeans, maintained the gloomy look he had worn for most of the trial.

The case was a rerun of hearings last year that resulted in a hung jury.

Platonic Relationship

The relationship between the pair -- with what prosecutors alleged was her access to confidential documents and his glamorous life in London -- was the focal point of the trial.
In 2005, Choucair, the London-born son of a successful Lebanese construction entrepreneur, started betting on market rumors about upcoming mergers and acquisitions. He met Abdel-Malek after his mother ordered curtains for his apartment beside the Royal Albert Hall from her mother. Years later, when they rekindled a platonic relationship, Abdel-Malek was six years into a promising career as a UBS compliance officer, but still living at home with her parents and two sisters in West London.

In spring 2013, Choucair bought Abdel-Malek a pay-as-you-go BlackBerry, identical to the model she used at work. Every few months he gave her a new Sim card. When UBS upgraded Abdel-Malek’s handset, Choucair again bought her the same model. Choucair testified that their communications were purely social, but that he was worried it would tarnish Abdel-Malek’s image if UBS found out they were speaking. The prosecution said it was to hide that she was feeding him tips.

Champagne at Tramp

Every several weeks or so, Choucair spent thousands of pounds on three-liter bottles of champagne at Tramp, a celebrity haunt in Mayfair he’d been going to since 2001. Choucair often invited Abdel-Malek, her friend and her sister to the exclusive establishment. She could only get in by invitation from a member, like Choucair.

Though Abdel-Malek said she barely drank, the prosecution said the glamorous allure of Tramp was enough of a motive for her to betray her employer’s confidence. She denied that, testifying that she wouldn’t risk throwing her career away for a couple of glasses of champagne.

With Abdel-Malek’s help, the prosecution said, Choucair traded on large corporate merger talks, including Vodafone Group Plc’s $10 billion bid for Kabel Deutschland AG in June 2012. The pair were indicted over five trades, though, in the absence of the jury, the prosecution said that it suspected her of leaking information on 30 deals in that year.

The investigation started in June 2014, when an officer of the U.K.’s National Crime Agency spotted Choucair talking with a trader named Alshair Fiyaz, at London’s Four Seasons Hotel, lawyers for the FCA and Choucair said during the trial.

Choucair testified that he didn’t count on Abdel-Malek for information, but relied on a loose group of traders such as Fiyaz, a man wealthy enough to buy billionaire Roman Abramovich’s superyacht and own a polo club in St. Tropez.

After the trial, Fiyaz’s lawyers dismissed Choucair’s allegations, saying that their client has never been under investigation by the FCA “or any other authority.’’

“Mr. Fiyaz vehemently denies any reported claims designed to portray him as a trader engaged in unethical practices,’’ his lawyers at Lewis Silkin said in a statement. “He is a highly respected businessman and philanthropist who has worked extremely hard in order to achieve success in his professional life.’’

Choucair also said he had a close relationship with journalists, particularly Bloomberg’s former head of deals reporting, Jeff McCracken, whom he said he spoke with several times a week.

Choucair said he fed McCracken tips with the hope the journalist would confirm them with legitimate sources. If McCracken broke a story and a company’s share price jumped, Choucair and his trading associates could sell their investments at a profit. McCracken, who joined CNBC in 2017, wasn’t accused of wrongdoing and declined to comment.

To contact the reporter on this story: Franz Wild in London at fwild@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser

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