A former partner at Cazenove, the Queen's stockbroker, has been charged with insider dealing by the Financial Services Authority in the regulator's second criminal prosecution.

Malcolm Calvert, a former trader who retired from Cazenove in 2000, is accused of exploiting inside information about planned takeovers in which Cazenove was involved. He is alleged to have bought shares in six companies including HP Bulmer and RAC, between 2003 and 2005, after he left Cazenove.

Mr Calvert, 63, from Cobham, Surrey, appeared at City of Westminster Magistrates' Court yesterday when he indicated a plea of not guilty to 12 counts of insider dealing.

Sarah Clarke, an FSA lawyer, told District Judge Anthony Evans that Mr Calvert instigated a scheme whereby he passed information on takeovers to a friend, named as Mr Hatcher. Mr Hatcher, who has agreed to appear as a prosecution witness, executed the trades with profits split two thirds to one third in Mr Calvert's favour.

Ms Clarke said that Cazenove — for which Mr Calvert worked for 39 years — acted as an adviser in all six of the takeover deals that Mr Calvert is alleged to have profited from. That created an inescapable inference, Ms Clarke said, leading the FSA to believe that the insider was in some way linked to Cazenove.

Cazenove, which is not involved in Mr Calvert's prosecution, declined to comment.

The judge agreed to the FSA's request that the case be transferred to the Crown Court. The maximum sentence for insider dealing is seven years in prison. Proceedings were adjourned until September 11. Mr Calvert declined to comment.

In the past the FSA has faced constant criticism for being too soft on insider trading and too reluctant to use its powers as a criminal prosecutor.

The FSA's only other criminal case was against the former general counsel of TTP Communications, a telecoms group, who was alleged to have passed inside information about an upcoming takeover to his father-in-law.

Margaret Cole, the FSA director of enforcement, said last month that the regulator was willing to send people to jail to help to stamp out insider dealing. FSA data indicates that nearly a third of British takeover deals result in what it terms “suspicious” trading. The regulator has said that it was pursuing a third criminal insider dealing case, although it has not provided details.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts