The Wall Street Journal reports that Sean Pignatelli, a former US equity salesperson at Credit Suisse, has been fined $38,000 by UK regulator The Financial Services Authority (FSA) for making a series of calls to clients giving the impression that he was sharing inside information. Although the information turned out not to have been 'inside', the regulator ruled that, by passing it along in this manner, he 'failed to observe proper standards of market conduct'.
On May 24th last year, Pignatelli, who is now said to work for Cowen International, received an e-mail from one of Credit Suisse's analysts in New York. The mail claimed to offer up a 'good tidbit to pass around' about US medical devices company Boston Scientific. Apparently the analyst had met with the company CEO, and had established that Boston Scientific planned to lower its earnings estimates the following day, due to an R&D overspend.
Within minutes of receiving the e-mail, Pignatelli kicked into sales gear and was on the phone to clients, passing on the tip to four hedge funds, telling one client that they should 'keep it to yourself....don't want to get into trouble......just a heads up ahead of tomorrow's analyst meeting'.
Credit Suisse's compliance team were quickly onto the matter, and reported it the following day to the FSA, dismissing Pignatelli around a month later. In the event, the FSA said that the information Pignatelli had obtained was not in itself inside information, but he passed it along in a conspiratorial manner and gave the impression that it was. And that, too, is a no-no. Pignatelli should have discussed the contents of the e-mail with his compliance department before making any calls.
The Financial Times reports that Pignatelli told the regulator that he 'just (goes) into sales mode, you know, try and make the call look as proprietary as possible'.
Pignatelli cooperated fully with the FSA investigation.
To view a transcription of two of Pignatelli's calls to clients that day, please press the link below:
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