Ian Hannam resigned Tuesday from J.P. Morgan Cazenove in London after he was fined by the British Financial Services Authority (FSA) for insider trading. He intends to appeal the fine.
Reuters reported that the FSA fined Hannam 450,000 pounds ($720,000) for providing inside information about a client via email in 2008. The move was part of a crackdown by the regulator, which has previously been accused of being ineffective against abuses in the financial industry.
“I will complete my current client commitments and ensure a smooth handover of responsibilities,” Hannam said in a statement. “Appealing the case while still at the firm would be an unfair distraction to my clients and colleagues.” J.P. Morgan notified personnel in an internal memo of his decision.
Hannam is the fifth person to be fined this year, and is one of the most high profile, and the fine levied against him is one of the largest against an individual.
In its statement, the FSA said Hannam had disclosed inside information on Heritage Oil, a client of his, which had mandated J.P. Morgan in 2007 to secure a “substantial” corporate transaction. The information was contained in two emails sent in September and October 2008. One message provided information about a potential offer for Heritage; the other disclosed a new oil find. Both pieces of data had the potential to move markets.
The first email, sent to an individual identified as Mr. A by the FSA, said in part about takeover talks, “I believe that the offer will come in the current difficult market conditions at 3.50-4.00 pounds per share. I am not trying to force your hand, just wanted to make you aware of what is happening.” Mr. A was supposed to be working with an organization that was interested in investing in Kurdistan, where Heritage was working.
A separate e-mail provided information to both Mr. A and another individual also with interests in Kurdistan, referred to as Mr. B. Hannam told them, “Tony [Heritage CEO Tony Buckingham] has just found oil and it is looking good.”
Hannam, who said he had cooperated fully with the FSA, had said that the information was too general to be inside information, and that Buckingham had already advised Mr. A about it.