Newspaper article The Evening Standard (London, England)

Calvert's Conviction Will Encourage the FSA to Go Hunting for More Scalps; COMMENTARY

Newspaper article The Evening Standard (London, England)

Calvert's Conviction Will Encourage the FSA to Go Hunting for More Scalps; COMMENTARY

Article excerpt

Byline: Simon English

TODAY'S sentencing of former Cazenove partner Malcolm Calvert for insider trading will send a jolt across City dealing rooms.

For most of the history of London's financial centre, trading on privileged information was not only legal it was expected -- a perk of the job.

Even since it was made a criminal offence in the 1970s, many in the City have enjoyed the certainty that convictions were extremely hard to secure and therefore rare -- only the foolish or careless were caught.

The FSA secured its first victories last March when a solicitor, Christopher McQuoid, and his fatherin-law, James Melbourne, were found guilty of dealing in shares of TPP Communications. The pair split a profit of [pounds sterling]50,000 . McQuoid got eight months in prison, Melbourne the same sentence suspended for a year. They was clumsy to say the least.

The conviction of Calvert on five counts of insider trading relating to trades in six shares between 2003 and 2005 is a game-changer. Calvert was a pro, a respected and clever operator.

A newly emboldened Financial Services Authority may now be willing to pursue cases against individuals and perhaps entire firms even when it lacks watertight evidence, say lawyers.

Calvert, although retired, is a major scalp as he worked for Cazenove, a firm at the heart of the City.

Cazenove, now owned by US banking giant JP Morgan, is at pains to point out that it was not on trial. Nevertheless the case is an embarrassment to a firm which prides itself on a reputation for discretion and fair dealing.

Rumours about the identity of the secret source within the bank that leaked details of impending takeover bids to Calvert were today flying across town. Who else at Cazenove was at it? The FSA spent four years and a great deal of money on bringing Calvert to trial. If it had lost it would have been deeply disappointed and would probably have backed off on other cases that are pending.

Daren Allen, a partner and head of their financial services team at legal eagles DLA Piper, says traders are effectively on notice.

"It sends out a clear message to those in the financial sector that they have to be on their guard. …

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