Morrison treasurer suspended over insider dealing probe
Wm Morrison has suspended its treasurer after his arrest on suspicion of insider dealing ahead of the supermarket chain’s tie-up with Ocado, the online grocer.
Paul Coyle, Morrison’s group treasurer and head of tax, was arrested in Harrogate in December in connection with an investigation by the Financial Conduct Authority, said two people familiar with the matter. He has not been charged with any offence.
The FCA said at the time that a 49-year-old had been arrested and released in relation to insider dealing and market abuse, and that the arrest was not linked to any other insider dealing investigation.
The matter is thought to relate to dealing in Ocado shares before the two companies announced a £200m distribution deal in May.
The tie-up was transformational for Ocado, catapulting it from being purely an online grocery to also having a technology services arm. Shares in the lossmaking online retailer have risen more than 250 per cent since rumours of the agreement emerged.
The 25-year partnership was also widely seen as significant for Morrison. Its chief executive, Dalton Philips, had said the grocer was missing out on about £500m in sales by not having an online business.
News of Mr Coyle’s suspension, coming just 10 days after the first deliveries were made under the Ocado deal, is a further blow to the UK’s fourth-biggest supermarket chain following a disappointing Christmas.
Morrison was the worst hit among the big food retailers, reporting like-for-like sales down 5.6 per cent, excluding fuel, in the six weeks to January 5. Its shares fell 8 per cent in response to the trading update, but closed up 1 per cent on Monday at 254.9p.
The Financial Times also reported earlier this month that activist investors – including Elliott Associates, one of the most aggressive US hedge funds – had built a stake in the struggling grocer and were pushing for a radical shake-up of its property portfolio.
Insider dealing is a criminal offence that is punishable by a fine or up to seven years’ imprisonment.
Listed companies in the UK are required to have strict policies on the handling of inside information – including data on companies they are doing corporate deals with. They must maintain lists of company employees with access to the inside information and notify those individuals of their responsibilities to handle it with care.
If a company has failed to control access to inside information or failed to make employees’ obligations clear then it could in theory amount to a breach of the listing rules. This can lead to a censuring of the company or a fine.
Tony Woodcock, a litigation partner at Stephenson Harwood, said: “The investigative process can be a long haul, even for cases which – at their factual heart – appear straightforward.
“Morrison may have its own exposure if there are found to be failings in its procedures relating to the use of inside knowledge. But beyond that, it will be expected to co-operate with the FCA investigation through means such as providing access to relevant documents, background information, witness statements and, if necessary, attendance at court. It can happen that such enquiries uncover wrongdoing on a broader front.”
Morrison, the FCA and North Yorkshire police declined to comment. Mr Coyle could not be reached for comment.