Supermarket executive charged with insider trading
A former senior executive at the Morrison supermarket group has been charged with insider trading over alleged dealing in Ocado shares before a £216m tie-up between the two retailers was announced.
In the latest scandal to strike one of the UK’s “big four” supermarkets, the Financial Conduct Authority has charged Paul Coyle, the former group treasurer and head of tax at Morrisons, with two counts of insider dealing.
The FCA confirmed in a statement that the charges relate to trading in Ocado shares between February and May 2013.
The value of Ocado rocketed last year after it announced a tie-up with Morrisons to create a new online service for the Bradford-based retailer.
Shares in Ocado doubled between March 14, the day the online grocer first confirmed it was in talks with Morrisons, and the day of Mr Coyle’s arrest in mid-December. Ocado, which was the best-performing major stock in Europe last year, revealed the details of the deal with Morrisons in May.
The charges for Mr Coyle come just a week after Tesco revealed it had found a £250m shortfall in its expected profits. The company, Britain’s biggest retailer, is understood to have asked a collection of banks to help it build a £2.5bn war chest. This banking facility could protect the company from possible downgrades by credit-rating agencies, which they are considering as a result of the accounting crisis.
Shares in Tesco, Morrisons and J Sainsbury fell again on Monday as investors digested the latest news and figures from discount retailer Aldi that showed it has increased profits by 65pc as the major supermarket chains struggle. In contrast to Aldi’s growth, Sainsbury’s is expected to report a decline in like-for-like of sales of around 3.5pc in a trading update on Wednesday.
Mr Coyle was arrested in Harrogate in December when he was still in his role as group treasurer and head of tax at Morrisons. He was subsequently suspended by the Bradford-based retailer, which is not the subject of an investigation. Morrisons insisted it was “satisfied with the organisation’s governance and procedures concerning the handling of market sensitive data”.
Mr Coyle has been released on bail and will appear at Harrogate Magistrates' Court on October 30. He joined Morrisons in 2006 and has also worked for KPMG and Inland Revenue.
Insider dealing is punishable by a fine or up to seven years in prison.
In a statement, Morrisons said that no other employees are involved in the FCA investigation.
"Morrisons are satisfied with the organisation’s governance and procedures concerning the handling of market-sensitive data in this instance and found that the company’s procedures had been properly followed," it added.
"These accusations, if proven, would be the result of an individual acting alone."