Ex-Morrisons head of tax jailed for insider dealing

Paul Coyle, the former group treasurer and head of tax at supermarket group Morrisons, has been jailed over a £79,000 insider dealing fraud related to the company’s link-up with online grocer Ocado

Coyle was given a 12-month prison sentence at Leeds Crown Court after pleading guilty to two offences of insider trading. He was found to have bought and sold shares in Ocado during a three month period when the company was in discussions with Morrisons over the development and launch of an online business.

The court heard that between 24 January and 17 May 2013 Coyle was regularly privy to confidential price sensitive information about Morrison’s ongoing talks regarding a proposed joint venture with Ocado.

Coyle, a former Inland Revenue tax inspector who also worked for KPMG and as head of tax at the RAC, was a key figure during the negotiations and signed an agreement in January 2013 prohibiting him from trading in Ocado or Morrisons shares.

However, the court heard that Coyle acted on his inside information by trading in Ocado shares between 12 February and 17 May 2013 using two online accounts which were in the name of his long-term partner.

He did so ahead of an official notification that the two companies were engaged in talks, which was released on 14 March 2013, and continued to buy and sell more shares as the Morrison share price fluctuated in response to market speculation over the deal, which was said to be worth £216m to Ocado.  

The first offence related to Coyle buying 24,895 Ocado shares before the announcement on 14 March. The second offence related to trading in 100,450 shares following that announcement.

Coyle then sold his shares after an official announcement was made that the two firms had reached a formal agreement, on 17 May 2013, making a profit of £60,000.  His total profit from insider trading, including interest, was calculated at £79,431.

In sentencing Coyle the judge, Mr Justice Globe, said: ‘the offending was so serious that an immediate custodial sentence must be imposed.’

Globe told Coyle: ‘You came into possession of that information by your senior position within the organisation. Your breach of trust was significant.

‘Your actions were deliberate and in my judgment dishonest. You knew at the time what you were doing was illegal. Your actions continued over a three-month period and involved a number of individual trades.’

Coyle immediately resigned after the offences came to light. As well as the 12-month jail sentence, he has been ordered to pay £15,000 towards prosecution costs and a confiscation order in the sum of £203,234, which represents the amount Coyle originally spent on purchasing the shares, plus his profit from the deals.  

Georgina Philippou, director of enforcement and market oversight at the Financial Conduct Authority (FCA), which brought the case, said: ‘Mr Coyle committed a serious breach of trust by using the confidential price sensitive information he received as part of his role at Morrisons for his own personal gain.  

‘We are committed to prosecuting insider dealing to ensure our markets remain a “level playing field” for all participants.’   

A Morrisons spokeswoman said: ‘While this was a regrettable case of an individual acting alone, we are pleased that our governance and processes were sufficiently robust to enable the authorities to achieve a successful prosecution.

‘We are also pleased that the case has concluded and that the FCA’s investigation did not raise wider concerns for the company.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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