1987 Stock-broker guilty of corruption

One of the City’s top investment bankers has received the first conviction for insider dealing since it became illegal in 1980.

Geoffrey Collier, former head of securities at Morgan Grenfell, was given a 12-month suspended sentence and was fined £25,000 with £7,000 costs at the High Court in London.

The court heard that Collier’s crime began last autumn when he was working on the secret takeover of engineering firm AE by Robert Maxwell.

Early on Monday 3rd November he rang a colleague at the Los Angeles branch of his former employer, Vickers de Costa, and instructed them to buy 60,000 AE shares through a nominee company.

At 0815 GMT, trading began in London with AE shares valued at 239p. When the Maxwell bid was announced 15 minutes later the shares had shot up to 265p. Collier had made £15,000 profit in less than an hour. 

His actions were uncovered by colleagues in London who traced the deal to the Cayman Islands company that Collier had formed several years earlier.

Insider dealing occurs when somebody profits from trading shares based on confidential information, usually before public announcements.

City experts say there are frequently suspicious price movements in the markets and insider dealing is often the cause.

In passing judgement Mr Justice Farquharson said that people like Collier had “blemished the City’s reputation throughout the community”.

The sentence has cost Collier his career and six-figure salary, but opposition MPs still consider it an inadequate deterrent.

Courtesy BBC News

In context

Insider dealing became a criminal offence with The Companies Act 1980 when it was the Stock Exchange’s responsibility to monitor and regulate its members.

In 1986 Sir Martin Jacomb, former chairman of stockbroker Barclays de Zoete Wedd, described the offence as a “victimless crime”.

When the Criminal Justice Act 1993 amended the legislation only 23 of the 52 people tried had been successfully prosecuted in the 34 cases brought since 1980.

In December 2001 the Financial Services Authority (FSA) finally took over the regulatory powers described in the Financial Services and Markets Act 2000. Under this act insider dealing was made a civil offence requiring a lighter burden of proof.