Posted by mb50
A JP Morgan senior banker has quit his job after being fined for abuse of insider information about Heritage Oil.
by Michelle McGagh on Apr 03, 2012 at 10:35
A JP Morgan chairman has quit after being find £450,000 by the City regulator over abuse of insider information relating to a new oil find by Heritage Oil and an offer for the company.
Ian Hannam, chairman of capital markets at JP Morgan Cazenove, has been fined by the Financial Services Authority (FSA) after it discovered he had disclosed inside information in two emails sent in September and October 2008 to a prospective client.
Hannam will appeal the FSA’s decision but has resigned because it would be ‘an unfair distraction to my clients and colleagues’, according to the Guardian.
The information related to Heritage Oil (HOX.L), which was an existing JP Morgan client for which Hannam was the lead adviser.
In the September email, Hannam said of a potential acquisition: ‘I thought I would update you on discussions that have been going on with a potential acquirer of [Heritage Oil chief executive] Tony Buckingham’s business.
‘Tony, advised by myself, has deferred engaging with the client until Thursday of next weeks although we know they are very excited about the recent drilling results of Heritage Oil…I believe that the offer will come in in the current difficult market conditions at £3.50-£4.00 per share. I am not trying to force your hand, just wanted to make sure you aware of what is happening.’
In the second email, Hannam discloses information about a potential oil find, he said: ‘PS – Tony has just found oil and it’s looking good.’
A Fortune article last year described Hannam as a working-class South Londoner, the son of a council worker. He joined the Territorial Special Air Service (SAS) at 17 – one of the youngest men to pass the selection process. Hannam went on to gain a civil engineering degree at Imperial College before going into construction where his first assignment was building roads in Oman.
Hannam then went to business school and embarked on a training programme at Saloman Brothers in New York and worked his way up the corporate ladder – getting caught in the Robert Maxwell fiasco along the way.
The Fortune article said: ‘From Congo to Columbia, from Iraq to Sierra Leone, Hannam and his small team of soldiers-turned-bankers and advisers did business with oligarchs, gem deals, and former mercenaries.’
The FSA said it accepted that Hannam did not deliberately set out to commit market abuse. Hannam has referred the decision to the Upper Tribunal where he and the regulator will state their cases. The Tribunal will determine whether to uphold, vary or cancel the FSA ruling.
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.’
- Banker fined for ‘market abuse’ censures FSA (telegraph.co.uk)
- Credit Suisse salesman fined £210,000 by FSA (guardian.co.uk)
- Fomer Merrill Lynch broker fined £350,000 for ‘serious market abuse’ (guardian.co.uk)
- FSA fines two more over Greenlight insider trading (telegraph.co.uk)
- London’s FSA Alleges ‘Market Abuse’ By David Einhorn (blogs.wsj.com)