Lawyers at U.S. Firms Face FSA Insider-Trading Case

A former and a current partner at the London offices of two U.S. law firms face insider-trading charges next month brought by the U.K. Financial Services Authority, according to court documents.

Andrew Rimmington, a corporate partner at Dorsey & Whitney LLP, and Michael Gerard McFall, an ex-corporate partner at McDermott Will & Emery LLP face FSA prosecution. Former Neutec Pharma Ltd. financial director Peter Andrew William King will also be charged. The criminal prosecution relates to Novartis AG’s 2006 takeover of Neutec, according to the court documents.

It’s the fifth criminal insider-trading case prosecuted since January 2008 by the FSA, which is trying to take a tougher stand on financial crimes. Chief Executive Officer Hector Sants in March said people "should be frightened" of the regulator.

"This is going to be a very high-profile case," said David Corker, a criminal defense lawyer who specializes in white-collar fraud at Corker Binning in London. "Bearing in mind the damage it will do to the lawyers and their firms, I hope that the FSA are convinced of the strength of their case and not just doing it to send out a deterrent."

King and McFall face charges of insider dealing and disclosing non-public information. Rimmington will only be charged with insider trading, according to court documents. The men were ordered to appear before a London criminal court in June in connection with the charges, the documents show.

Novartis Takeover

Ian Mason, Rimmington’s lawyer at London-based Barlow Lyde & Gilbert confirmed that his client is involved in the case and declined to comment further.

"I don’t know what to say," said McFall, declining further comment. He left McDermott earlier this year to set up a private-equity advisory firm.

A voicemail message left at a mobile-phone number for King wasn’t immediately returned. King doesn’t work at Novartis, according to the company. Eric Althoff, a spokesman for the company, declined to immediately comment.

The three men could get as many as seven years in jail each if found guilty.

The FSA in March won its first insider-trading case against TTP Communications Plc’s former general counsel. Four other defendants are also scheduled to go to trial this year. The agency arrested two more suspects in another case after its win in the TTP case.

Non-Public Data

After attracting criticism from lawmakers for not doing enough to prevent the crime, the FSA last year warned lawyers and other takeover advisers about mishandling non-public data.

Abi Jones, an FSA spokeswoman, declined to comment.

Julie Stott, a spokeswoman for McDermott, said that McFall left the firm in January. He didn’t work on the Neutec takeover, she said.

"We can confirm that the matter in question was not something that the firm was working on," Stott said in a phone interview.

Neutec rose 84 percent to 925 pence after it said on June 6, 2006, that it was in talks with a potential acquirer. Novartis, Europe’s second-largest drugmaker, said it was buying Manchester, England-based Neutec the following day for 10.50 pounds a share, or 305 million pounds ($472 million) in total.

Spokespeople at Dorsey weren’t immediately available to comment.

Rimmington, who qualified as a lawyer in 1994 after attending Nottingham Law School, joined Dorsey in 1998 from London-based law firm Nabarro.

McFall was also at Dorsey for six years until 2004, when he joined McDermott. He qualified in 1992, according to data from the Law Society, a U.K. professional group for lawyers.

(Published by Bloomberg - May 20, 2009)