Going inside the FSA

The Financial Services Authority's (FSA's) enforcement division is on a good run. In March, it secured the conviction of former TTP Communications general counsel Christopher McQuoid for insider dealing. Then, earlier this month, the Financial Services and Markets Tribunal found in its favour while upholding an earlier civil decision that stockbroking firm Winterflood Securities had committed market abuse.

Perhaps this is why its director, the tough former White & Case litigator Margaret Cole, seems so relaxed when we meet at the FSA's Canary Wharf headquarters.

"Insider dealing prosecutions used to come with a health warning," she explains with a laugh as she reflects on the McQuoid case - which stemmed from a share purchase made as a result of a tip-off that TTP was about to be taken over by US mobile giant Motorola, and culminated in the jailing of McQuoid for eight months.

"There continues to be a persistent mindset that this sort of thing isn't really a criminal matter," continues Cole; "so the special challenge was conveying to a jury that insider dealing is akin to theft."

She is equally pleased with the result of the Winterflood appeal - which saw the firm fined £4m and went some way to answering the critics who have accused the FSA of going after minor targets while turning a blind eye to sophisticated trading rings.

"It was a case we had pursued for a while, heavily defended throughout and resulted in one of the biggest penalties ever imposed - it shows we are prepared to be persistent and follow cases through."

For Cole, 47, these battles are what law is all about. "I like courts, I like watching juries and I know from my time doing international arbitration that there is nothing better than cross-examining a witness and catching them out in some way." She thinks her interest in litigation was sparked by watching legal TV dramas as a child in Preston: "What can I say? I was brought up on that sort of thing and I became fascinated."

After high school, Cole went to Cambridge to study law. Having ruled out a career at the Bar due to the lack of sponsorship provided by chambers in those days, she joined Stephenson Harwood, qualifying as a solicitor in 1985. A rapid rise through the ranks followed, with Cole - the daughter of a factory worker and a children's home assistant - making partner in 1990 and gaining full equity status two years later. "I know that sort of thing wouldn't happen now. I just got really good cases," she recalls, citing the Maxwell pensions funds dispute as her big break: "Maxwell gave me a lot of visibility, partly because I became a sort of unofficial spokesman on the legal elements of the case in the press and on TV."

An enthusiasm for dealing with issues in the public domain was to play a key role in Cole's subsequent decision to join the FSA. But first came her 1995 move to US giant White & Case, which was looking for a hungry young partner to establish a London litigation team. "They wooed me," she smiles.

Those who know Cole describe her as "dogged" and "incredibly focused" - qualities that once saw her negotiate for two nights in a row without sleep during the liquidation of failed bank BCCI. No doubt this reputation played a part in the FSA's thinking when, keen to alter perceptions, it approached her in 2005 to head its enforcement division. Ready to do something different after helping to build a 50-strong litigation team at White & Case, Cole accepted the offer despite the substantial pay cut it involved.

Her arrival at the FSA coincided with a sweeping redundancy programme, which saw a third of the division leave. This was followed by a similarly large-scale wave of recruitment, with a host of former City professionals brought in to replace outgoing staff members. Cole accepts that some of these recruits may return to law firms at some stage, but says she does not mind as long as she gets "three to five years of good quality work" out of them.

The division currently contains around 300 staff (half of which are lawyers) and is set to grow by a further 20% this year. Employees are split between departments known as 'legal' (featuring a team of employed barristers), 'wholesale' (focusing on market abuse) and 'retail' (divided into three further groups according to the size of the retail organisations they monitor). A fourth retail group focusing on unauthorised business people - for which the FSA is currently hiring - will shortly be formed. On top of that, Cole says she is looking to bring in another 40 people across the various departments - attributing the need for more bodies to a "cultural shift" in attitudes to enforcement within the organisation. "Previously it was seen as a bit of a last resort," she explains. "But now it has become a really important part of the tool kit." Testament to this are the three further insider trading cases which are scheduled to come to trial this year.

With such a large team it is no surprise that most of the legal work is done in-house. Major advocacy mandates are the exception, with Michael Bowes QC (Outer Temple), John Kelsey-Fry QC (Cloth Fair Chambers) and Richard Latham QC (7 Bedford Row) typically used on criminal matters. Tim Dutton QC, Guy Philipps QC (both Fountain Court) and Javan Herberg QC (Blackstone Chambers) are the civil regulars.

Cole says she cleared large chunks of her diary during the week of the McQuoid trial so that she could watch Bowes, who she instructed on the case, in action. Did she ever think: 'that should be me'?

"I have the odd wistful moment about not being on the front line, yes," she responds. "But I'm not going anywhere. Why would I? People would kill to get my job."

Career timeline: Margaret Cole

• 1982 Graduates from New Hall College, Cambridge, with law degree
• 1985 Qualifies as a solicitor with Stephenson Harwood
• 1990 Promoted to partner
• 1995 Moves to White & Case where she sets up litigation department
• 2005-present Joins the FSA as head of enforcement

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