The Financial Services Authority (FSA) once again found itself humiliated at the hands of Paul "The Plumber" Davidson yesterday, as a London tribunal ordered the regulator to pay his legal costs and expenses, claiming the FSA's recent attempt to fine him for market abuse was "unreasonable".
The tribunal also ordered the FSA to meet the legal costs of Ashley Tatham, a trader who was also accused but later cleared over charges of market abuse. Although Mr Davidson represented himself through much of the four-year investigation, it is thought that the pair's combined legal bills could be as high as £2m.
The Financial Services & Markets Tribunal cleared both Mr Davidson and Mr Tatham of market abuse charges in May - adding to a string of recent tribunal defeats for the regulator. Yesterday's ruling, however, is the first time the FSA has been ordered to pay costs - a measure which the tribunal can only impose if it believes the regulator was unreasonable to have taken the action it took in the first place.
The ruling brings the curtain down on a costly and often farcical investigation. The low point for the regulator came two years ago, when the head of its Regulatory Decisions Committee, Christopher Fitzgerald, was forced to resign after compromising the original tribunal hearing.
The FSA had allegedMr Davidson had breached regulations by taking out a spread bet relating to the share price of a fledgling biotech firm, Cyprotex, in which he was the largest shareholder. Mr Tatham was the trader who laid the bet. The regulator had proposed to land Mr Davidson with a £750,000 fine - its biggest ever penalty to an individual. Mr Davidson was declared bankrupt at the end of 2004.Reuse content