SFA expels ex-Merrill analyst from register

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The Independent Online
A FORMER analyst with Merrill Lynch, who used inside information to help his housemates avoid a pounds 175 loss on a share deal, has been expelled from the register of the Securities and Futures Authority (SFA), the stockbrokers' watchdog.

The SFA yesterday said it had settled disciplinary proceedings against Graham Friend - a 28-year-old chartered accountant who was a small companies research analyst at the firm.

Mr Friend's activities only resulted in two of his housemates avoiding a loss of around pounds 175, but the regulator said he had been deemed "not fit and proper" to be registered by it in any capacity.

Mr Friend - who was responsible for the media and retail sectors at Merrill - had in April last year suggested his housemates buy shares in a company which he was also recommending in a research report. Two of his housemates followed his advice.

On 27 May, Mr Friend was asked to sign an "insider form" by Merrill Lynch before receiving information which was not available to the public about the firm in question.

This said the company was about to release a trading statement outlining an anticipated loss of pounds 2m for the year to the end of July 1997.

Mr Friend contacted his housemates and told them to sell their shares in the company, which they did. The trading statement was released the next day and the shares fell to 14p from 17p.

"By his actions, Mr Friend enabled his two housemates to avoid a loss in the region of pounds 175. In the knowledge that an investigation was pending, [he] made Merrill Lynch aware of his conduct," the SFA said. Mr Friend will also have to pay pounds 3,000.

But the watchdog stressed it had not, and could not, find Mr Friend guilty of the criminal offence of insider dealing, and the "inside information" did not fall under the definition of the Criminal Justice Act 1993.

- Reuters