Terence Mowschenson QC, one of the four members of the Financial Services & Markets Tribunal which is hearing the case of Paul "The Plumber" Davidson, bowed to pressure to resign from the panel yesterday, following accusations that he had prejudiced proceedings.
Mr Mowschenson, who is also a deputy High Court judge, came under pressure to step down after it was revealed he held a conversation with Christopher Fitzgerald, then chairman of the Financial Services Authority's Regulatory Decisions Committee, after the first day of the hearing last week.
Mr Fitzgerald, who also resigned after the conversation was bought to the attention of the FSA's lawyers seven days ago, was ultimately responsible for handing down a £750,000 fine for alleged market abuse to Mr Davidson, which is now the subject of the appeal.
Earlier this week, it emerged that Mr Mowschenson and Mr Fitzgerald, who are neighbours, had also talked about the case prior to the beginning of the hearing last Monday, as well as after the case had begun.
While Mr Mowschenson has insisted he did not discuss the detail of the case with Mr Fitzgerald, a statement issued by Mr Fitzgerald to the tribunal last week said the pair had talked about several factual matters in relation to the case.
In correspondence to Mr Davidson's solicitors, Mr Mowschenson also presented a different recollection of events to Mr Fitzgerald. Yesterday, Wilberforce Chambers, where Mr Mowschenson is employed, said the QC would not comment.
A hearing of the tribunal, to decide how to proceed, will be held on Monday. Mr Davidson's lawyers, headed by Bitu Bhalla - best known for representing the farmer Tony Martin who shot dead a burglar on his property - want a new team appointed. However, it is believed the FSA's lawyers are hoping to continue the hearing with the three remaining members of the panel. Appointing a new panel could put the hearing back months.
Mr Davidson's case relates to two spread-bet transactions linked to the fledgling biotech company Cyprotex, which were carried out just weeks before its AIM flotation in 2002. The bets were hedged by the broker, City Index, by taking out a "Contract for Difference" with Dresdner Kleinwort Wasserstein Securities. DKW in turn hedged its position by buying a substantial amount of the Cyprotex placing.
The FSA alleges Mr Davidson, who owned a 35 per cent stake in Cyprotex, deliberately engineered the bets to help get the company's float away after institutional interest flagged. Mr Davidson denies any knowledge of the transactions, insisting it was his broker who made the bets without his knowledge or consent.Reuse content