The decision on whether to pursue the case and apply for a retrial of Dr Douglas Swinden ultimately rests with Ian Lang, Secretary of State for the Department of Trade and Industry. "We are considering our position," a spokesman for the DTI said yesterday. A decision is expected within the week.
Legal sources said it would be usual for the case of Dr Swinden to be tried again, but the trial judge, Mr Justice Mitchell, indicated he did not think a retrial would be necessary.
"I would like to place on the record my feelings, for what they are worth. But I do feel it would be wrong to proceed with the matter," the judge said at Snaresbrook Crown Court, east London.
Separately, it emerged yesterday that in the wake of this setback the DTI had secured a conviction in another insider trading case, the first this year.
The DTI confirmed that Geoffrey Atkinson and John Hawksby were found guilty on 1 November in a case involving dealings in shares in Queens Moat Houses. The two men are due to be sentenced tomorrow.
In the case of Dr Swinden, the DTI alleged that he bought shares in Seeboard, another regional electricity company, before the release of a price-sensitive and confidential report by Professor Stephen Littlechild, the industry regulator.
Dr Swinden had bought 2,000 Seeboard shares at 350p each between 24 June and 1 August 1994 out of a pounds 15,000 bonus he had received from Eastern, where he was director for strategy.
Seeboard shares rose 100p in a month after the report by Professor Littlechild was published.
Speaking after the trial of Dr Swinden had ended inconclusively, the judge said: "There were very unusual circumstances in the case." They included evidence of the company secretary of Eastern, who told Dr Swinden, when asked, that he did not believe the information was unpublished and price sensitive and therefore he could see no reason prohibiting Dr Swinden from buying shares in another company.
The two charges faced by Dr Swinden were the first brought under the Criminal Justice Act 1993 which gave the DTI greater powers in insider dealing cases.
Clare Montgomery QC, prosecuting, told the jury: "Dr Swinden was in a privileged position compared with anyone who was thinking about buying shares. He knew there was good news around the corner and bought those shares when he should not have."
Professor Littlechild wrote to the directors of the 12 regional electricity companies on 24 June 1994, giving proposals for price controls. He made them public on 11 August.
"The professor was proposing a better deal for the companies. This was a considerable improvement upon changes which had caused the Stock Exchange shock with the effect that millions of pounds was wiped off the value of the shares," Ms Montgomery said.
"The information Dr Swinden had was not in the public domain. The public did not have copies of the letter that he had been given."
Dr Swinden denied using price-sensitive information and said there was no indication whether share prices would rise or not as a result of the regulator's announcement.
David Kirk of Simons, Muirhead and Burton, representing Dr Swinden, declined to comment yesterday.
Comment, page 21
The DTI's 10-year record
Insider dealing convictions
1996 Geoffrey Atkinson and John Hawksby awaiting sentence this week. Convicted on 1 November of dealing in Queens Moat Houses shares.
1995 Brian Ridge fined pounds 1,300 and costs for dealing in London Scottish Bank and Park Ford Gp.
1994 Ian Morrissey and Lorelie Staines each fined pounds 1,500, dealing in Aaronson Bros.
1993 No convictions
1992 David Gray, 6 months suspended for 2 years, fined pounds 5,000 and pounds 500 costs, trading in Pleasurama. Three other people's convictions in the same case overturned on appeal in 1994.
1991 Frederick Stebbing fined pounds 5000 and pounds 500 costs, and Peter Sewell pounds 24,000 and pounds 5,000 costs, for trading in Camotech.
Ivor Goodman 18 months imprisonment, 9 months suspended, disqualified for 10 years as director, for trading in Unigroup shares
1990 John Henry Lukins fined pounds 750 and pounds 432 costs, Peter Bernard Lukins fined pounds 500 and pounds 290 costs, trading in shares of Pittard Garner.
Malcolm Gooding 120 hours community service, pounds 500 costs, trading in Hawtal Whiting
1989 Nicholas Rushbrooke fined pounds 2,000 and pounds 750 costs, trading in Piccadilly Radio
Keith Robinson fined pounds 1000 and pounds 500 costs, trading in Mercantile House Holdings
John Hales fined pounds 15,000, pounds 1,000 costs, trading in Minet Holdings
1988 William Reardon-Smith fined pounds 3,000, pounds 2,000 costs, trading in Reardon- Smith Line
1987 Ronald Jenkins fined pounds 10,000, pounds 2,000 costs, trading in Steel Brothers and British & Commonwealth.
Geoffrey Collier, 12 months sentence suspended for two years, pounds 25,000 fine and pounds 7,000 costs.