Leading City traders given legal aid to fight insider dealing case

Assets have been frozen so the taxpayer will step in to fund their defence costs

Seven traders arrested by the City watchdog in the biggest insider dealing investigation yet seen in Britain will have their defence costs paid for by legal aid,
The Independent has learned.

The seven men, including some of Britain's most wealthy and successful traders, were detained in dawn raids by the Financial Services Authority and the Serious Organised Crime Agency (Soca) on 23 March and have since been bailed by magistrates.

However, it is understood that all have had their assets frozen, with their living allowances set at only a few hundred pounds a week each. Sources close to the inquiry said that because of this they would qualify for legal aid – at a seven-figure cost to the taxpayer.

The accused worked for some of the City's highest profile and most powerful institutions, including the hedge fund Moore Capital, Deutsche Bank, Exane BNP Paribas and Novum Securities. Accustomed to seven-figure salaries and bonuses, they are having to get used to far more modest lifestyles than they once enjoyed.

Andy Millmore, the head of litigation at law firm Harbottle & Lewis, said their defence costs would rapidly swell to more than £1m and beyond if and when the case came to court. Mr Millmore, who has been involved in a number of major City cases during his career, said: "I would I expect that the defendants will need separate representation. I think that in a case of this magnitude that if they are charged the legal costs would be well in the hundreds of thousands of pounds in each case. Put that together and the final figure will be well over a million."

The revelation that seven of London's most wealthy financiers qualify for legal aid is likely to cause even more public fury than the news last week that three former Labour MPs facing fraud charges over their expenses claims will also receive legal aid funded by taxpayers. Politicians across the party divide have pledged to change the law on legal aid.

Sources last night indicated that it could be well over a year before a case against the seven finally reaches court, if charges are ultimately brought against them. The investigation, which involved 143 FSA staff together with Soca operatives, is the first in which the two bodies have collaborate.

It is part of a far-reaching crackdown on insider trading and is widely expected to be followed by further arrests in the Square Mile and Canary Wharf as a series of cases come to their conclusions. The FSA reckons up to a third of the deals in the City are accompanied by insider dealing.

The regulator's aggressive campaign against incidents of insider dealing, led by its head of enforcement Margaret Cole, follows criticism that it was not doing enough to stamp out the practice, and has spread fear through dealing rooms.

The FSA has so far secured five jail terms, one of them suspended, relating to insider trading. The most recent was handed to Malcolm Calvert, a former partner at the Queen's stockbroker, Cazenove, who was convicted at Southwark Crown Court last month and jailed for 21 months.

On Wednesday, another seven men charged by the regulator as part of its "Project Saturn" inquiry into claims of insider dealing by staff in the print rooms of two investment banks, JPMorgan Cazenove and UBS, appeared at a preliminary hearing.

The watchdog is under threat of closure should the Conservatives win the election. David Cameron's party has pledged to transfer many of its powers to the Bank of England and set up Consumer Protection Authority. The FSA declined to comment.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor