Trial poses questions about newspaper tipping schemes

The events at issue in the City Slickers trial date back to late 1999 and early 2000, when the Daily Mirror ran the daily share…

The events at issue in the City Slickers trial date back to late 1999 and early 2000, when the Daily Mirror ran the daily share-tipping column.

The way Mirror employees had bought shares tipped in the newspaper first became the subject of an internal inquiry, handled by Lovells law firm, five years ago. The inquiry included the column's two authors - James Hipwell, who was found guilty of manipulating the stock market yesterday, and Anil Bhoyrul, who had entered a limited guilty plea to the same charge shortly before the trial.

This was followed by a four-year inquiry by the Department of Trade and Industry (DTI). The affair brought Piers Morgan, the paper's editor at the time, into the spotlight when it emerged that he had bought £67,000-worth (€99,021) of shares in computer company Viglen, partly in the name of his wife, the day before its shares were tipped in the column .

Although Morgan was criticised by the Press Complaints Commission (PCC), which ruled that he had breached the industry's code of conduct, he was cleared of misconduct by Trinity Mirror's internal inquiry. The DTI said last year that it did not intend to take criminal proceedings against him.

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Instead, the authorities focused on prosecuting the column's authors, together with Terry Shepherd, a private investor who had been in telephone contact with them and who posted information about their tips on an internet bulletin-board.

The DTI estimates that the three men made more than £70,000 between August 1999 and February 2000.

Prosecutors alleged that they had operated a strategy of buying shares, tipping them in the paper and then selling the stock shortly afterwards, in short, a "buy, tip, sell" scheme.

They claimed that, by failing to disclose this conflict of interest, the pair gave "a misleading impression as to the value of shares".

They also claimed that many of the tips were factually inaccurate, and that the tone of the articles was deceptive because it gave the impression that stocks should be bought when in fact the duo themselves were selling.

By contrast, lawyers for Hipwell argued that he had behaved openly and traded with the knowledge, even encouragement, of his superiors.

"[ Morgan] was happy for us to trade and even used the analogy along the lines of, you would not learn to drive from somebody who had never been in a car.

"You would not learn from a manual," the journalist told jurors.

Hipwell's defence also stressed there had been no formal rules barring journalists on the paper from dealing, and that the PCC code was never displayed.

His finances, it was claimed, meant, in effect, he was obliged to trade shares within the settlement periods.

As for Shepherd, he was described by Hipwell's barrister as "no more than an optimistic, wacky traveller in cyberspace", while the trader himself categorised some of his bulletin postings as "a bit of lunacy and rambling".

Defence lawyers claimed there was no evidence the bulletin-board postings had misled anyone.

Legally, the case raised questions about the extent to which the men's behaviour constituted "an agreement", and also raised the the issue of whether or not newspaper tips could really create a misleading impression of stock market values.

But Hipwell's evidence included some interesting revelations.

The journalist claimed, for example, that he was asked to assist Morgan following the Viglen episode.

After Lovells was called in, Hipwell said he was approached by Martin Cruddace, an in-house lawyer at the time, and Tina Weaver, the Mirror's deputy editor.

"They came over to my desk and said I needed to help Piers Morgan because he was in trouble and that I should generally frustrate the Lovells investigation . . . I needed to make it clear that Piers had not seen the Viglen story before it went in the paper," he said.