Adviser takes fall for Hunt – but City watchdog and Leveson want answers

Adam Smith, shortly after resigning as special adviser to the Culture Secretary (EPA)

The City watchdog is considering an investigation into the Culture Secretary Jeremy Hunt and his adviser over whether the secret briefing of News Corp during the company's £8bn bid for BSkyB amounted to "market abuse".

The Financial Services Authority is understood to be concerned that emails from Mr Hunt's special adviser, Adam Smith, contained financially sensitive information that should not have been released to the Murdoch empire.

Mr Hunt failed to quell concerns about his integrity yesterday, despite the resignation of Mr Smith, following the release of hundreds of emails which appeared to show that the cabinet minister's inner circle gave News Corp an inside track on the progress of its bid – a breach of its quasi-judicial role. And last night another of Mr Hunt's advisers – a senior civil servant – was embroiled in the scandal when emails emerged suggesting that Mr Hunt's office had asked him to lobby a regulator for a key element of the proposed takeover to be waved through.

Mr Hunt and David Cameron defended their conduct in the House of Commons yesterday, while across London at the Leveson Inquiry the News Corp chairman Rupert Murdoch discussed meeting the Conservative leader on his yacht.