Pace Micro accountant fined for insider dealing

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A former senior accountant at the troubled set-top box maker Pace Micro Technology was fined £250,000 for insider dealing yesterday, after losing his appeal against the City watchdog in a London tribunal.

James Parker, a long-serving employee at Pace, breached the financial regulations in 2002, when he sold his personal shares in the company after discovering that a major competitor had withdrawn from takeover talks with Pace.

Pace subsequently revealed news of collapsed bid talks to the market, at the same time as issuing a profit warning, sending the shares plummeting. Shortly before the announcement Parker took out spread bets, in effect shorting the stock and making further profits.

The FSA calculated that the accountant made an abusive profit of £153,942 from the trades, and moved to fine him £300,000. Although the tribunal upheld the FSA's ruling that Parker had acted in breach of market regulations, it reduced the fine after recalculating Mr Parker's abusive gains as £121,742.

"Mr Parker used information which had come to him in order to place bets to his advantage and to the detriment of [the spread betting company], which he knew had no access to the same information," the tribunal concluded. "Using ordinary language, that is cheating and it would be recognised by any reasonable person as such."

Parker declared himself bankrupt days before his appeal hearing began. However, the tribunal said he had so far failed to show evidence of his financial situation. As a result, the FSA still plans to levy the fine, and will join the queue of other creditors.

He may also face other fines and penalties. If he remains a member of any professional accounting bodies, it is likely he will be subjected to a disciplinary hearing in which he could be fined or struck off the register.

Pace Micro was fined £450,000 by the FSA last year for not keeping investors informed of material information. Also, it has issued a string of profit warnings over the past few years.