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Mr Christopher McQuoid, a solicitor, and his father-in-law, Mr James William Melbourne were today found guilty of insider dealing.
The case was heard at Southwark Crown Court and is the first insider dealing criminal prosecution brought by the Financial Services Authority (FSA), as part of its tougher approach to tackling market abuse.
The jury found that Mr McQuoid had passed inside information to his father-in-law and that Mr Melbourne had traded, and made a profit, using the information. The FSA has also obtained a court order freezing the profits made from the trade, which Mr McQuoid and his father-in-law split equally between them.
Commenting on the verdict, Margaret Cole, director of enforcement at the FSA, said:
“By pursuing a criminal prosecution in this case, the FSA has shown that we will take tough action to achieve our aim of credible deterrence in the financial markets. Mr McQuoid took advantage of the trust placed in him as TTP’s legal counsel, and with his father-in-law, has been found guilty of cheating the market. Anyone engaging in similar acts should see this as a clear warning that the FSA intends to bring all its powers to bear to protect the integrity of our markets.”
Mr McQuoid was the general counsel at TTP Communications (TTP) from August 2000 to March 2007. In May 2006, he was told in confidence that Motorola was planning to take over the company. Two days before the takeover was made public, his father-in-law, Mr Melbourne bought 153,824 TTP shares at 13 pence a share. Mr Melbourne had not dealt in any shares recently or ever bought TTP shares. On 1 June, the takeover was announced at an agreed share price of 45 pence. As a result of the price increase, Mr Melbourne made a profit of £48,919.20. Three months later, he gave Mr McQuoid a cheque for £24,459.60 exactly half of the profit made from the TTP shares trade.
The suspicious trading was reported to the FSA as required under its rules.
The sentencing hearing for Mr McQuoid and Mr Melbourne will take place on Monday, 30 March. The FSA is currently prosecuting three other insider dealing criminal cases.
