A former IT technician at Body Shop, the ethical retailer, has been fined for market abuse in a rare victory for the Financial Services Authority in its battle against insider dealing.

The City regulator said yesterday that it had fined John Shevlin £85,000 after he was found to have gained inside knowlege by snooping on confidential e-mails between executives.

Mr Shevlin, who worked at the beauty company's head office in London, borrowed more than his annual salary to bet that Body Shop's share price would fall, having obtained a sneak preview of an unexpectedly bleak Christmas trading update.

As an IT technician, it is likely that Mr Shevlin had privileged access to executives' passwords, enabling him to access their computers without their knowledge, the FSA said.

It is not clear whether Mr Shevlin, who joined Body Shop in 1998, had any access to computer equipment operated by Dame Anita Roddick, the company's founder, who died last year.

According to the FSA, Mr Shevlin borrowed £29,000 on January 10, 2006, for short-selling. He offloaded 80,000 shares in Body Shop that he did not own in the hope of buying them back more cheaply at a later date. His annual salary was £28,000.

The FSA said that he built up a total underlying exposure to the company's share price through contracts for difference (CFDs) of £213,536.

He made a profit of £38,472 by closing out his position a day later, once the disappointing trading update had been circulated to the wider market and Body Shop shares had fallen.

The FSA discovered Mr Shevlin's activities after one of the brokers that he had been using submitted a suspicious transaction report. Mr Shevlin used numerous spread-betters between January 1 and January 10, 2006, including IG Markets, IFX Markets and Squaregain.

Margaret Cole, director of enforcement at the FSA, said: “Mr Shevlin deliberately set out to obtain highly sensitive and valuable information to which he was not entitled. He abused the trust placed in him by his employers and misused his technical skills to gain a financial advantage over other market users.”

Last October, Ms Cole unveiled a crackdown on market abuse, stating that the regulator would choose to pursue more criminal convictions rather than chasing civil cases.

Although the FSA admitted that it had failed to establish that Mr Shevlin was guilty of insider dealing, it said information that emerged in the latter stages of its investigation provided compelling evidence that this had happened.

Mr Shevlin, whose FSA case was civil rather than criminal, no longer works for the Body Shop. He denied any guilt throughout the process, according to the regulator. His solicitor did not return calls seeking comment yesterday. The FSA said that because Mr Shevlin had chosen not to admit to trading using inside information, it had not reduced his fine.

Yesterday's fine represents the first time since last March that the regulator has levied a fine for market abuse.

It is also one of the rare occasions that the regulator has fined an unauthorised individual. It comes as the FSA clamps down on dealers who indulge in market abuse by creating false rumours about a company and then taking a short position in the shares.

Most recently, the FSA attracted controversy by demanding that investors who short shares in companies carrying out rights issues disclose their exposure if it is worth more than 0.25 per cent of the value of a target company.

The move was widely seen as a defence of a £4 billion rights issue under way at HBOS, the mortgage bank, whose shares fell heavily after it was targeted by hedge funds and other aggressive investors.

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