View from City Road: Trial that need not have happened

Another Serious Fraud Office prosecution has collapsed, but this time the Elm Street gang are not to blame. Directing a jury to find two stockbrokers not guilty of the fraud charges they faced, Judge Clark yesterday said he could conceive of no possible criticism of the SFO's decision to pursue the case.

It seems the SFO has been duped. On the basis of information from Rahn & Bodmer, a private Swiss bank, it sought to prove that Andrew Kent and Patrick Mahon had deceived financial regulators to ensure the continued authorisation of their firm, TC Coombs. But the testimony of witnesses during the two-month trial, together with documents that Rahn & Bodmer only produced earlier this year, made it clear that the charges were insupportable.

The judge said the evidence of five witnesses - three of them from Rahn & Bodmer, including Dr Christian Rahn - was 'unsatisfactory and dubious'. The jury's verdicts would have been based on 'mere speculation'.

While Mr Kent and Mr Mahon must be pleased with this outcome, it does not give them their livelihoods back. The SFO's highly publicised raid on TC Coombs in November 1990 hastened the firm's demise. Few tears were shed by the Stock Exchange and the Securities Association - TC Coombs was not popular.

Its collapse, however, cost 180 people their jobs. If the share deal at the heart of the case was valid, perhaps this need not have happened. Since the SFO embarked on the prosecution with incomplete and possibly misleading information, Mr Kent and Mr Mahon might well feel entitled to some redress.

Judge Clark added his voice to the increasing number of lawyers who feel these cases would be far better handled by financial regulators rather than the courts. This argument is particularly strong in cases such as this, where no investors have suffered loss and the issues rest on the arcane rules of capital adequacy.

The investigation and trial of Mr Kent and Mr Mahon has cost the public purse hundreds of thousands of pounds, perhaps millions. The SFO and other authorities involved might offer some recompense if they take action against those who have caused this waste of money.