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Solicitor and his father-in-law found guilty in FSA insider dealing case

Solicitor Christopher McQuoid and his father-in-law, James William Melbourne have been found guilty of insider dealing in a prosecution brought by the FSA.

The case, heard today at Southwark Crown Court, is the first insider dealing criminal prosecution brought by the FSA, as part of its tougher approach to tackling market abuse.

The jury found McQuoid had passed inside information to his father-in-law and that Melbourne had traded, and made a profit, using the information. The FSA has obtained a court order freezing the profits made from the trade, which McQuoid and his father-in-law split between them.

FSA director of enforcement Margaret Cole says: “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.”

In May 2006, while general counsel at TTP Communications, McQuoid 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, bought 153,824 TTP shares at 13p a share.

Melbourne had not dealt in any shares recently or ever bought TTP shares. On June 1, the takeover was announced at an agreed share price of 45p. As a result, Melbourne made a profit of £48,919. Three months later, he gave McQuoid a cheque for £24,459.

The suspicious trading was reported to the FSA as required under its rules.

The sentencing hearing for the two men will take place on March 30, 2009. The FSA is currently prosecuting three other insider dealing criminal cases.

Gerallt Owen, head of international regulatory and corporate crime at Crowell & Moring and defence solicitor for McQuoid says: “We are very disappointed with the jury’s majority verdict and are actively considering and anticipate submitting an appeal on behalf of Mr McQuoid.”

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