The Financial Services Authority may start to take enforcement action in cases where circumstantial evidence exists if Margaret Cole's plans to be "bold and resolute" come to fruition, lawyers have warned. Philip Rubens, partner at Finers Stephens Innocent, said that the FSA might start investigating less watertight cases. He gave an example of a case where the FSA might intervene: Mr A, chairman of a company, has a phone conversation with Mr B, and there is evidence that it took place but not of what was said; shortly afterwards, Mr B buys shares in a company whose share price rises substantially because of events of which Mr A had prior knowledge.

There is only circumstantial evidence of insider trading here, Rubens said. "Parties have successfully appealed against FSA enforcement because the evidence against them was circumstantial or conflicting."

The lack of evidence is hardly surprising, Rubens said. "You can't expect someone to write a memo based on insider information saying 'I'll be dealing based on inside information'."

The FSA may prefer to bring a case based on circumstantial evidence rather than doing nothing, Rubens said. "It could be a big wake up call to those who think that if nothing is recorded and they make their conversations on mobiles, they can get away with market misconduct."