FSA hits Ian Hannam (now ex-JP Morgan Cazenove) for £450,000 [updated] | FT Alphaville

FSA hits Ian Hannam (now ex-JP Morgan Cazenove) for £450,000 [updated]

That is one serious fine… and one very serious resignation.

From the FSA’s statement (emphasis ours):

The Financial Services Authority (FSA) has today published a Decision Notice for Ian Hannam, the Chairman of Capital Markets at J P Morgan Cazenove. The Decision Notice indicates that the FSA has decided to fine Hannam £450,000 for market abuse.

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.

The full judgement, which is thoroughly recommended reading, is here.

But by way of summary, the  first offending email in September:

“I thought I would update you on discussions that have been going on with a potential acquirer of Tony Buckingham’s business. Tony, advised by myself, has deferred engaging with the client until Thursday of next week 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 you aware of what is happening”.

And more succinctly put in October:

“PS – Tony has just found oil and it is looking good”.

And now Reuters is now reporting that Ian Hannam has resigned and has decided to appeal the FSA decision.

From his statement (our emphasis):

I have fully cooperated with the FSA from the start. It is important to note that the FSA has not challenged my fit and proper status and has accepted that I acted with honesty and integrity. It has also accepted that I was acting in the best interests of my client and no one benefited or was damaged. I strongly believe, and have been advised by my legal counsel, that the FSA’s conclusions are wrong and I look forward to challenging them in an independent tribunal.

For a little background on Mr. Hannam and how some felt he was a bit of “an unguided missile”, click here.

Related link:
Cazenove, the broker that got brokered, FT Alphaville
Vallares deal straight from Hannam’s handbook, FT
That Heritage/Genel deal (updated), FT Alphaville