Ex-Legal & General Trader Pleads Guilty for Insider Trades

Paul Milsom, the former Legal & General equities trader, pleaded guilty to one count of passing inside information to an independent stockbroker, giving the U.K. finance regulator its first conviction in its highest-profile insider trading case.

Graeme Shelley, the independent broker who previously worked at Novum Securities Ltd., was charged with 28 counts of insider trading for share transactions from October 2008 to March 2010 in companies including broadcaster ITV Plc, according to the U.K. Financial Services Authority, which is prosecuting the case. The lone charge against Milsom includes 28 instances of leaking insider tips.

Shelley didn’t enter a plea and both men were released on unconditional bail at a London court hearing today. The regulator charged five other individuals last year as part of the investigation into the front-running of block trades, known as Operation Tabernula, Latin for little tavern.

The FSA arrested seven people and raided 16 addresses in London and southeast England in March 2010 as part of the probe. Milsom was arrested in February last year. The first five defendants who have been charged haven’t entered pleas.

Legal & General “assisted the FSA” following Milsom’s arrest, the company said in an e-mailed statement. Milsom “had been suspended since his arrest, and now that he has pleaded guilty, will be subject to our disciplinary procedures.”

He wasn’t in control of any client funds, the firm said.

Milsom’s case was transferred to a higher criminal court. Shelley is scheduled for a second appearance at Westminster Magistrates Court on Feb. 27.

Before it's here, it's on the Bloomberg Terminal.