Keydata founder Stewart Ford has today won a landmark High Court judgement against the Financial Services Authority (FSA), which was found to have acted unlawfully in its use of legally privileged material in its enforcement investigation.
Ford secured leave to take the FSA to a judicial review in March this year over the regulator's use of legally privileged emails from Keydata's and Ford's former legal advisers, Irwin Mitchell.
The FSA obtained the emails, which contained legal advice and attendance notes of meetings with Irwin Mitchell and counsel, after it had successfully applied to the High Court for the appointment of its own nominated administrators, PriceWaterhouseCoopers (PwC), to take control of Keydata.
At the FSA's request, PwC gave the FSA full access to Stewart Ford's email account and then waived Keydata's legal privilege with respect to the content of the documents.
Ford later became aware that the information the High Court has now confirmed as privileged was in the hands of the FSA when he and Keydata were served with the FSA's investigation reports
Neither the FSA nor PwC had informed Ford that his email account was being accessed and copied, or consult him on the waiver of legal privilege.
He subsequently challenged the use of the emails as evidence in the FSA's enforcement case against him.
Today the judge presiding over the case, Mr Justice Burnett, determined that, due to joint legal privilege, "the FSA may not rely upon the content of those communications in the regulatory proceedings".
It is the first time an FSA own-initiated investigation has been the subject of a successful judicial review.
The FSA has previously been censured by a judicial review only with respect to action it took at the request of the US Securities and Exchange Commission (SEC).
Ford said: "The FSA's illegal use of legally privileged material is only one in a long catalogue of abuses in its handling of its investigation into Keydata.
"It is appalling just how far the FSA's enforcement investigation team has gone in seeking to justify its destructive and ill-judged actions with respect to Keydata and Lifemark."
He repeated his call for a full public enquiry into the FSA's handling of Keydata, which he said was a "regulatory stitch-up".
In a statement the FSA said it acknowledged the court's decision.
"The FSA notes the decision of the Court. The judgment concerns whether or not Mr Ford could claim privilege in respect of eight documents and concluded that in six cases he could not.
"There will be a further hearing in due course to determine remedy, which may take some time."
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till