Seven men were accused in a British court on Monday of a one million pound fraud using confidential bank documents in the largest insider dealing case ever brought before court by the financial regulator.

A lawyer for the Financial Services Authority told London's Southwark Crown Court that the men used inside information to place spread bets on companies shortly before takeovers were announced, netting more than one million pounds.

The allegation here is that the defendants got rich by using unpublished price-sensitive information, Michael Bowes told London's Southwark Crown Court.

Ali Mustafa, Pardip Saini, Paresh Shah, Neten Shah, Bijal Shah, Truptesh Patel and Mitesh Shah are, between them, accused of 10 counts of insider dealing using information obtained from the London printers of Swiss bank UBS and U.K. brokerage J.P.Morgan Cazenove .

Bowes said the men knowingly used inside information to bet on the prices of shares in UK-listed firms over two years, including media group Reuters during its 2007 takeover by Thomson Corp of Canada. Thomson Reuters declined comment.

The men are also accused of using unpublished information to place bets on shares in Biffa , Premier Oil
, Vega Group, Enodis and Thus Group between May 2006 and May 2008.

Biffa, Premier Oil, Vega Group, Manitowoc Foodservice, of which Enodis is now a fully owned subsidiary, and Thus Group were not immediately available for comment.

Bowes said the men obtained the inside information from Ali Mustafa, who worked in the print room of UBS, and his brother Ersin Mustafa, who worked in the print room of Cazenove. Ersin Mustafa did not appear in court.

The prosecution's case is that neither Ali nor Ersin Mustafa had the slightest doubt that what they were doing was wrong, neither did the other defendants. They had the information knowing it was from an inside source, Bowes said.

He told the court the defendants had placed a large number of their spread bets through co-accused Mitesh Shah, a broker at brokerage house Finspreads, which later became City Index Limited.

In this case spread betting involves speculating on how a company's share price is likely to perform in the future and then putting money on it.

City Index Limited and UBS were not immediately available for comment.

Bowes said the men had quite deliberately placed these trades through Mitesh Shah because he was a watchdog who wouldn't bark.

As head of the Asian desk from 2004, Mitesh Shah had the authority to accept orders from clients and then book a spread, Bowes said.

The defendants used power of attorney accounts -- accounts that were not under their name but which they had the authority to trade in -- as a way of detracting attention and parcelling out the profits, Bowes said.

Every alarm bell would have been ringing for an honest broker, he said, adding that Mitesh Shah had quite deliberately not reported anything.

Neten, Paresh and Bijal Shah are all related, while Mitesh Shah is a friend of Paresh and Neten, and Pardip Saini is a friend of Ersin Mustafa, Bowes said.

The FSA has been criticized as being unable to haul in big-hitters in its attempts to stamp out insider trading in London. The regulator has brought 11 successful criminal cases to date.

(Reporting by Michelle Martin; Editing by Jodie Ginsberg)