FSA Fines Executive at J P Morgan Cazenove for Market Abuse
The Financial Services Authority (FSA) has published its decision to fine Ian Hannam, the Chairman of Capital Markets at J P Morgan Cazenove, £450,000 for market abuse.
In April 2010 the Financial Services Act 2010 amended section 391 of FSMA giving the FSA giving the FSA the power to publish decision notices. This power became active in October 2010. The FSA has previously published 14 decision notices following the granting of the new power by Parliament.
Hannam has referred the matter to the Upper Tribunal (the Tribunal) where he and the FSA will each present their case. The Tribunal will then determine the appropriate action for the FSA to take. The Tribunal may uphold, vary or cancel the FSA’s decision. The Tribunal’s decision will be made public on its website.
In the Decision Notice dated 27 February 2012, the FSA set out its decision to fine Hannam for two instances of market abuse (improper disclosure).
In the FSA’s opinion, Hannam disclosed inside information in two emails sent in September and October 2008 to a prospective client. The emails contained inside information relating to Heritage Oil Plc (Heritage), an existing J P Morgan client for which Hannam was the lead adviser.
The September email contained information about a potential offer for Heritage and the October email contained information about a new oil find by Heritage.
The Decision Notice states that the FSA accepts that Hannam did not set out to commit market abuse but considers that Hannam’s failings were serious in view of his experience and senior position within J P Morgan.
The FSA believes that the size of the proposed fine reflects the serious nature of the market abuse and should act as a deterrent to other market participants.
Tracey McDermott, acting FSA director of enforcement and financial crime, said: “Inside information is extremely valuable and must be handled with care to ensure that it is properly controlled and that appropriate safeguards are observed. This applies to all market participants but is particularly important for senior practitioners who will regularly interact with a wide circle of contacts”.
The FSA has recently imposed penalties on 4 other individuals in relation to their conduct in disclosing inside or confidential information. In January 2012 David Einhorn was fined £3,638,000 and Andrew Osborne was fined £350,000 for market abuse. Alexander Ten-Holter was fined £130,000. All three penalties arose out of the same matter. In a separate matter, in March 2012 Nicholas Kyprios was fined £210,000.