The record fine handed down to JP Morgan marked the latest stage in the FSA's attempts to crack down on the City, but the watchdog suffered a setback yesterday when two lawyers and a former finance director were acquitted of insider dealing charges that it had brought against them.
The lawyers, Michael McFall and Andrew Rimmington, had been accused by the regulator of making nearly £80,000 by using inside information allegedly provided by Andrew King, the finance director of NeuTec Pharma, to buy shares in the small Manchester biotech company shortly before its takeover in 2006.
However, Mr King and Mr McFall, a former mergers lawyer at McDermott Will & Emery, were cleared at Southwark Crown Court yesterday.
A judge told the jury to find Andrew Rimmington – whose case was halted last month after his brother was killed – not guilty following the verdicts on the other men. The case marked a reverse for the FSA after the successful conviction of Malcolm Calvert, a former Cazenove banker, for insider dealing in March.
The court had been told that NeuTec was subject to a £305m buyout by Novartis in June 2006 in which NeuTec's founders, Professor James Burnie and Professor Ruth Matthews, received about £21m for the business they set up at Manchester University in the late 1990s. It was alleged that the others profited from the deal through illegal methods.
Although the regulator has been running an aggressive campaign against those it believes have been trading in shares with knowledge that is not available to the market, convictions in such cases are hard to secure. The FSA is set to lose its powers over such inquiries and a new financial crime agency will assume the role of prosecutor.
Margaret Cole, the FSA's head of enforcement, said after yesterday's hearing: "Insider dealing cases are challenging to prove but these were serious charges and we considered that the evidence provided a proper basis to put the case before a jury for them to decide."