11th May 2012

FSA may probe NewsCorp emails

The Financial Services Authority (FSA) is considering scrutinising emails sent from the office of culture secretary Jeremy Hunt to News Corporation representatives, it has been reported.

Tuesday’s (April 24th) Leveson inquiry disclosed emails showing potential inside information was seen by NewsCorp public affairs executive Frederic Michel, the Guardian revealed.

Mr Michel is believed to have gained access to information on the culture secretary’s decision to refer the media company’s £8 billion bid for BSkyB to Ofcom.

In a case that could be in breach of insider trading rules, Mr Michel relayed the sensitive information to former NewsCorp head James Murdoch.

Jeremy Hunt’s special adviser Adam Smith resigned yesterday over the emails after recognising that his relationship with Mr Michel and the content of the emails was inappropriate.

According to the Guardian report, Mr Michel saw dozens of messages discussing the BSkyB bid and in passing the information to Mr Murdoch, he admitted such information was “absolutely illegal”.

Mr Murdoch argued that this reference was a joke.
Under section 118C of the Financial Services and Markets Act (2000), disclosing sensitive market information is in breach of the law regardless of whether any gains were made.

It is believed that the city regulator is contemplating taking the case further, however spokespeople from the FSA have failed to confirm or deny whether an investigation is to be launched, the Guardian said.

If the case goes through “initial analysis”, it would then be transferred to the watchdog’s enforcement unit for further scrutiny if that was determined to be necessary.

In that case, the FSA would have the authority to requisition emails, information on phone calls and other relevant data but the investigation would take several months before a charge could be made.

FSA/FCA, Panacea Comment