One of JP Morgan Cazenove's most senior banks has resigned after the City watchdog announced it was fining him £450,000 for market abuse.
Ian Hannam - chairman of capital markets at JP Morgan - has decided to appeal against the decision, and said he had resigned because it would be "an unfair distraction to my clients and colleagues."
The Financial Services Authority said in its opinion, Hannam had disclosed inside information in two emails sent in September and October 2008 to a prospective client.
The information related to a JP Morgan client Heritage Oil - which has coincidentally issued a positive update today - and involved, firstly a potential offer for the company, and subsequently a new oil find. The FSA said:
'(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'.
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'.
Hannam was strongly involved in bringing a number of major commodity companies to the London stock market, including Vedanta Resources, Kazakhmys and Ferrexpo.
The FSA said that Hannam's other clients and contacts included Mr A, a representative of an organisation with interests in Kurdistan and Mr B, a businessman with interests in Kurdistan.
The September email was sent to Mr A and included the following:
I thought I would update you on discussions that have been going on with a potential acquirer of Tony Buckingham's business [Heritage]. 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.
The FSA said he made these disclosures 'at a time when he knew that the recipient of his email might recommend that the organisation he represented (Organisation C) should enter into a corporate transaction with Heritage, whereby Organisation C would purchase a stake in Heritage'.
The second email, sent to Mr A and copied to Mr B, signed off:
PS – Tony has just found oil and it is looking good.
The FSA said it would have been clear from information in the public domain that the discovery related to Heritage's Warthog-1 well in Uganda.
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