Prosecution Starts in Motorola Insider Trading Case

The UK's financial watchdog, the Financial Services Authority (FSA) has launched its first prosecution for insider dealing - relating to the Motorola purchase of TTP Communications in 2006.

Former General Counsel of TTP Communications, Christopher McQuoid and James Melbourne appeared at City of London Magistrates' Court yesterday. The FSA is alleging that the two men, having prior knowledge of the Motorola purchase brought shares in TTP Communications at the end of May 2006. Motorola announced its intention to launch a takeover of the company just two days later in a deal valued at £103 million.

It is claimed that the two men purchased just over 153,000 shares in the company, which would have been valued at around £20,000 - which they were then able to sell for £69,000, netting them a profit of £49,000 between them before trading costs.

The defendants indicated a plea of not guilty. The court declined jurisdiction and held that the case was suitable for trial on indictment. Committal proceedings were adjourned until 19 February 2008 and the defendants were remanded on unconditional bail.

This is the first time the FSA has sought criminal prosecution in a case of insider trading, having previously preferred to fine the people involved. The move is widely seen as a clamp-down by the regulator which has been seen as a bit of a "soft-touch" by the financial market in this regard.

TTPCom, is focused on the three core areas of mobile phone technology - applications, protocols, and silicon. The TTPCom business was founded in 1988 and has approximately 575 employees.

Posted to the site on 23rd January 2008