The former treasurer and head of tax at Morrisons supermarkets has been jailed over a £79,000 insider dealing fraud linked to the company’s involvement with online grocer Ocado.
Paul Coyle, 50, was sent to prison for 12 months at Leeds Crown Court today after pleading guilty to two offences of insider trading.
Coyle, from Harrogate, bought and sold shares in Ocado during a three month period when the company was in talks with Morrisons over the development of the Yorkshire supermarket giant’s online grocery business.
Coyle, a former Inland Revenue tax inspector, was a central figure during the negotiations and signed an agreement in January 2013 which prohibited him from trading in Ocado or Morrisons shares.
The father-of-four used his partner’s trading accounts to buy Ocado shares ahead of an official announcement, on March 14 2013, that the two companies were engaged in talks.
Coyle continued to abuse his position and bought and sold more shares as the company share price fluctuated amid market speculation.
Coyle then sold his shares after an official announcement was made that the two firms had reached a formal agreement.
The court heard Coyle sold his shares on the same day, May 17 2013, and made a profit of £60,000.
His total profit from the illegal activities was £79,431.
Jailing Coyle, Mr Justice Globe said: “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 judgement 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.”
The judge added: “Insider dealing is not a victimless crime. It had an affect on the overall public confidence and in the integrity of the market.”
Laura Mackinnon, prosecuting, said Coyle, of Warwick Crescent, was at the heart of negotiations because of his expertise in finance and restructuring.
The first offence relates to Coyle buy 24,895 Ocado shares bought before the announcement on March 14.
The second offence relates to trading in 100,450 shares following the announcement.
Coyle’s partner of 28 years, Emma Baker, was interviewed by the Financial Conduct Authority (FCA) after the deception came to light and said she was unaware of him trading in Ocado shares.
Neil Hawes, mitigating, Coyle was still unable to explain why he had committed the offences. He said: “He is struggling to come to terms with what he has done.
“He cannot resolve why he committed the offence. It is a question that he cannot answer.”
Mr Hawes said the offending took place at a time when Coyle and his colleagues were under “overwhelming pressure.”
The barrister said: “They would put out a fire and another one would light.”
Coyle immediately resigned after the offences came to light.
He also resigned from his role as a trustee and chair of the financial committee for a hospice in Harrogate.
Mr Hawes said Coyle still had close links with the hospice and helped on a voluntary basis.
Coyle became head of tax at Morrisons in 2005. Before that he had been head of tax at the RAC.
Prior the that he had been a tax inspector and an adviser to a major accountancy firm.
Coyle was ordered to pay £203,234 under the Proceeds of Crime Act or face a further period of imprisonment.
The figure relates to the value of the shares plus the profits made on them.
He was also ordered to pay £15,000 court costs.
After the hearing, 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.”