Director denies insider dealing
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Your support makes all the difference.An Eastern Electricity board director purchased shares in another regional electricity company while relying on "a confidential letter" that indicated they would rise in value, a court heard yesterday.
Dr Douglas Swinden, 53, the former group strategy director of Eastern, bought 2,000 shares in Seeboard just days before a public announcement by the electricity industry regulator, Professor Stephen Littlechild.
Mrs Clare Montgomery QC, prosecutor, said the effect of the announcement was to boost share prices in the 12 RECs. Dr Swinden's shares in Seeboard had gone up by 100p each in a month, Snaresbrook Crown Court was told.
"Dr Swinden was in a privileged position compared with anyone else who was thinking about buying shares. He knew there was good news around the corner and bought those shares when he should not have," alleged Mrs Montgomery. "The information Dr Swinden had was not in the public domain. The public did not have copies of the letter that he had been given."
Dr Swinden, of Highwood Manor, Constitution Hill, Ipswich, denies two counts of insider dealing between 24 June, 1994 and 1 August, 1994.
The court heard that on 24 June, 1994, Professor Littlechild wrote to directors of the 12 RECs, including Dr Swinden, revising price controls he had proposed in an earlier consultation with the industry. When those earlier proposals had been leaked, shares in the RECs had fallen.
"The professor was proposing a better deal for the companies. This was a considerable improvement upon changes which had caused the Stock Exchange shock with the effect that millions of pounds was wiped off the value of shares," said Mrs Montgomery.
Dr Swinden was given the confidential report setting out the new proposals and on 29 July, 1994, the board of Eastern Electricity accepted the deal.
Mrs Montgomery said Professor Littlechild had planned to publicly announce the new charges on 11 August, 1994.
But before the announcement went public, Dr Swinden purchased 2,000 Seeboard shares valued at pounds 3.50 each. Following the issue of the statement by the regulator, share prices rose. Dr Swinden's purchase came to light a short while afterwards.
The Department of Trade and Industry launched an inquiry and, when quizzed, Dr Swinden said he had bought the shares in Seeboard as a long-term investment out of a pounds 15,000 bonus he was paid by Eastern.
He denied using price-sensitive information and said there was no indication whether share prices would rise or not as a result of the regulator's announcement. He also said that information was in the public domain, said counsel.
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