FSA using informants to uncover inside deals

Published on Saturday 13 March 2010 14:19

CITY watchdogs are battling wrongdoing by offering amnesty to informants to secure convictions and are setting up a new monitoring body.

The Financial Services Authority (FSA) persuaded an associate of former Cazenove stockbroker Malcolm Calvert to give details of his insider trading in return for lenient treatment.

Calvert was found guilty on five counts and jailed for 21 months after making 103,883 profit from trades between June 2003 and October 2004.

Following his co-operation, the FSA fined Bertie Hatcher, a retired bookmaker and insurance broker, and a friend of Calvert, 56,098 for market abuse between 2003 and 2005, equivalent to his net profits.

Hatcher was dealt with via the FSA's regulatory powers rather than in the courts.

Margaret Cole, director of enforcement and financial crime at the FSA, said: "Hatcher took part in illicit trades using inside information and profited from them; because of this he has received a significant fine.

"However, we were also mindful of the need to encourage others to come forward and assist in the investigation and prosecution of insider dealing and market abuse.

"Hatcher provided valuable evidence, not just about his own misconduct, but also in relation to Calvert.

"We will continue to enter into agreements of this sort where we believe it is in the public interest and interests of justice for the FSA to do so."

Meanwhile, three consumer protection bodies are to join forces to form a super consumer champion designed to spot commercial activities damaging to the public, and prevent them precipitating a full-blown crisis.

The FSA, Office of Fair Trading and Financial Ombudsman Service will team up to create a new consumer protection committee to scan for emerging risks.

Having detected potential hazards for consumers, the new body will be charged with finding fast and effective ways of dealing with them, whether through regulatory action or fast-tracking consumer complaints.

Sheila Nicoll, FSA director of conduct policy, said: "Complaints handling is a priority area within the FSA's intensive supervision agenda. The co-ordination committee is a clear indication of the intention, and will, of the authorities to work more closely to improve the experience of consumers, and to avoid problems happening in the first place."

Ray Watson, OFT director of consumer credit, said: "Identifying and dealing with problems at an early stage is important."