The Financial Services Authority (FSA) has been told by a judge that it must destroy privileged attorney-client emails it obtained as part of its investigation into Keydata.
Keydata founder Stewart Ford won a ruling in October that the FSA should not have used the emails, from Keydata's and Ford's former legal advisers Irwin Mitchell, and Judge Ian Burnett today said they must be deleted or destroyed.
However, the judge refused requests by Ford's lawyers to have the FSA's 2010 warning notice thrown out, while investigators who have seen the protected emails will be allowed to remain involved in the investigation.
Despite pleas from Ford's lawyers, Judge Burnett said the warning notice did not need to be quashed as the emails only formed a "very modest part of the overall picture painted by a detailed exposition of the facts and matters upon which the FSA relies".
He added: "The nature and extent of the alleged regulatory wrongdoing is such that the indicated sanction could not realistically have been different.
"The financial element of the proposed sanctions rests substantially on the alleged benefit to the claimant of his alleged wrongdoing."
He also said the investigation was already "substantially complete" and "drawing to its close", adding it would not be in the public interest to interfere with the process by removing investigators who had seen the emails.
However, one concession the FSA has already made is to ensure that no member of the Regulatory Decisions Committee who decided to issue the warning notice will have further involvement in the process, meaning Ford's response to the notice will be seen by people who have no knowledge of the contents of the emails.
The FSA's investigation into Keydata has been on hold since May 2011, after Ford applied for a judicial review into the use of the emails.
Moves to overweight equities and fixed income
The Big Interview: Focus on ethical investment
View from the front row
'No control or oversight'
359 new customers in 2018