Banker's 10-word email postscript might have cost him $45.5m

Email Simon Stratford

A pretty costly 'PS'.

A top investment banker was forced to relinquish up to $45.5m in bonuses from JP Morgan Cazenove after being accused by City watchdogs of improperly supplying inside information about a major oil deal.

Sky News has reported that Ian Hannam, who was given the soubriquet 'the king of mining mergers and acquisitions' because of his track record putting together multibillion pound takeovers, gave up the previously undisclosed sum when he left JP Morgan Cazenove last year.

His departure followed a $681,600 fine and censure imposed by the UK's Financial Services Authority (since renamed the Financial Conduct Authority) for market abuse, allegations that Hannam is disputing at a tribunal which got underway in London on Tuesday morning.

The Financial Times reports that the case turns on two 2008 emails from Hannam concerning Heritage Oil, a longstanding client of his, to Ashti Hawrami, oil minister at the Kurdish regional government that was both a potential client of Hannam’s and a potential investor of a stake in Heritage.

It is the second, more lengthy, email from Hannam to Hawrami in October 2008, that appears to be key to the case, and the regulator’s barrister, Richard Boulton QC, said it was the 10 words of a postscript to the email that are important:

'Tony has just found oil and it is looking good', the PS reads, referring to Heritage’s Uganda well known as Warthog-1.

'We rely on these 10 words as being the disclosure, improperly, of inside information', Boulton told the tribunal. 'The news that ‘Tony has just found oil’ could hardly be bad news for an oil-exploration company' (Tony Buckingham is Heritage's CEO).

Bloomberg reports that Hannam said Tuesday that he doesn’t believe that he broke any rules on the disclosure of inside information.

'I was acting in the proper course of my employment as a corporate financier, pursuing a transaction on behalf of my client, Heritage Oil & Gas', Hannam said in an e-mailed statement as the trial started. 'The case raises questions about the definition, and treatment of, inside information on the corporate finance side of the ‘Chinese Wall’ and clarification by the Upper Tribunal is important for London as a global financial center'.

No trades were made on the inside information and the regulator didn’t file criminal charges.

The tribunal continues.

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