Plumber wins his fight with the FSA
By Rosie Murray-West, Business Correspondent
Last Updated: 12:09am BST 13/10/2006
Paul Davidson, the entrepreneur known as The Plumber, has promised to seek £5m in costs after a tribunal found he had been unreasonably treated by the Financial Services Authority.
Mr Davidson took the FSA to tribunal after it attempted to fine him for market abuse. Despite representing himself to the tribunal without trained legal help, he has become the first person to win costs from the FSA.
Speaking from Portugal, the former pipefitter said that he would "break" the head of the Financial Services Authority, Sir John Tiner and the head of enforcement, Margaret Cole. "I haven't decided whether to report them to the DTI or not," he said. He added that he would sue the FSA and hoped to get £100m from the organisation "finally, when I've finished".
Mr Davidson was fined by the FSA after he took a spread bet in 2002 on the shares of Cyprotex, a company he was floating. Because the spreadbetting firm bought shares to cover the bet, Mr Davidson's actions effectively shored up the flotation of the company.
However, the Financial Services and Markets Tribunal found that the decision of the FSA to fine Mr Davidson was unreasonable. It ruled earlier this year that the FSA had not proved its case against Mr Davidson. The tribunal, which made its decision unanimously, did stress in May that it had "considerable reservations" about the evidence of Mr Davidson.
But it said that in the light of the evidence, it had to conclude "that the authority [the FSA] has not discharged its burden of proving. . . that Mr Davidson either created, or took part in, the scheme or arrangement to facilitate the flotation of Cyprotex."
The FSA declined to comment yesterday, saying only that it was "looking at the decision". Mr Davidson said that it showed that the FSA were "bigots and bullies".
"I have proved I am far sharper and brighter than them," he said.
Mr Davidson, who made his money by inventing a revolutionary radiator fitting called the Oyster Converter, went bankrupt during the years he spent fighting the case. "They ruined my life for five years," he said. "I've bounced back but for five years I couldn't do anything. I have no family life now. My wife left me. She got the house."
He told the tribunal that the failed FSA inquiry cost him £12m over three years. He spent £2m on lawyers before representing himself as well as losing £10m in the value of his shares in Cyprotex.
The tribunal, which also cleared trader Ashley Tatham who had been involved in placing the bet, is believed to have cost the FSA several million pounds and hundreds of man hours. The regulator was also forced to sack the head of its regulatory decisions commission, Christopher Fitzgerald, after he compromised the independence of Mr Davidson's first appeal hearing. Mr Fitzgerald admitted talking to Terence Mowschenson, QC, a member of the four-man panel hearing Mr Davidson's case, about the tribunal after the hearing had begun.
In December 2005, Mr Davidson was declared bankrupt with debts believed to be about £20m. He was earlier give a suspended sentence after declining to hand over data in a patent dispute with Oystertec, the pipefitting company he founded.