Insider trading in the City has long been a dark force. A few years ago the then FSA was boasting that it had managed to reduce 'suspicious' trades pre M&A announcements from 33% of all trades down to 25%.
It is an achievement, but from a pretty low base. Clearly, people in the know in the City were doing well.
Then since have some a raft of cases for insider trading. Often against relatively minor people and also for people making a few tens of thousands or maybe a £100k. That sounds like a lot of money but as we know, bankers are not motivated to ruin careers for money that would not cover one years bonus.
Today though the court has upheld a charge against Ian Hannam, a very well known and respected banker. For in 2008 he emailed discussions to a Kurdistani politician about a potential merger between Genel and Heritage Oil. Hannam maintains, that as a regulator and politician, he would have known this was sensitive information.
The judgement of the Court suggests that Hannam had not followed the law and informed the recipient that this was sensitive information. I have to wonder, having a little knowledge of how corrupt Kurdistan is, whether this would really make much difference. Reading between the lines' this is clearly Hannam's view.
But still, an example has been made of a senior Banker. In the US there have been three large cases of late of a more clear cut nature - Steve Cohen's SAC has not recovered from the scandal of its behaviour which has exposed a more egregious nature than Hannam's - far more pervasive.
Overall, I am glad the FCA continues to push the insider trading cases forward. Fairer markets are a must, especially as High Frequency trading further erodes the chances of retail investors getting any returns. Hannam is still a scapegoat example though, not that it seems to have damaged his business as Strand Partners is a success.
1 comment:
I don't think that passing around one's client's information about an impending takeover and then leaking the discovery of oil is other than disclosing insider information.
Everyone has jumped on the confidentiality undertaking point. However, what that is really about is the fact that if you are going to claim "course of employment" as a defence, you need as a minimum to make anyone you pass the information to an insider unable to deal on the information or tell anyone else. The reality is that Hannam should have kept quiet.
The Upper Tribunal isn't technically a court but it is broadly similar.
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