Events | 2010.02.16
Turkish oil boss hit by record insider dealing fine
• Genel Enerji chief must pay £1m for insider dealing
• Two fellow directors also fined over Heritage Oil trades
The City regulator has signalled a new hardline stance on insider dealing, handing down a record fine of nearly £1m to a Turkish oil company executive.
The Financial Services Authority said today it had fined Mehmet Sepil, the boss of Genel Enerji, £967,005 for market abuse, the largest penalty for an individual. It also fined his fellow directors Murat Ozgul, chief commercial officer, and Levent Akca, exploration manager. The two must pay £105,240 and £94,062 respectively after they bought shares in joint venture partner Heritage Oil following confidential test results that revealed a large oil strike in Iraq.
The fines, a total of £1.16m, include the repayment of profits made on the shares.
The previous highest FSA penalty for an individual was paid by Philippe Jabre, a former managing director of hedge fund GLG Partners. Jabre was fined £750,000 for market abuse offences in August 2006.
The three Genel Enerji directors\' fines were reduced by 30% after they voluntarily contacted the FSA, expressing remorse and promising to repay any profits. The men said in a statement they were unaware their actions broke any rules and the FSA said it accepted there was no intention to commit market abuse.
Genel, a privately owned company, is Heritage\'s partner in the Miran field in Kurdistan. The Jersey-based explorer, run by former mercenary Tony Buckingham, shared information about the find with Genel before informing the market.
The FSA said the three men attended a series of meetings on 4 May where the find was discussed. The following day all had asked their brokers to purchase shares in Heritage.
On 6 May Heritage announced what was billed as a "major oil discovery" to the City, sending its shares up 25%. That day Sepil, Ozgul and Akca all sold their shares at a profit.
Margaret Cole, director of enforcement at the FSA, said the size of the penalties sent a "clear message" to companies: "The FSA expects those entrusted with inside information not to betray that trust. We will not tolerate the abuse of a privileged position to make a personal profit at the expense of other market participants and these penalties underline our commitment to combating this behaviour."
Increasingly in cases of controversial share dealing the FSA has opted to fine suspects rather than pursue them through the criminal courts. The burden of proof required has made criminal convictions for insider dealing notoriously hard to secure.
For years FSA surveys of trading patterns around market-sensitive announcements have suggested insider trading is commonplace. In 2009 the watchdog levied a record level of fines, but there were only four convictions.
It is not the first time Genel has fallen foul of a regulator. In September, Norway\'s financial watchdog, Kredittilsynet, asked the police to investigate Genel\'s purchase of $30m of shares in Norway-based oil explorer DNO International as insufficient information about the ownership of the stake had been made public.
For more information, please visit
http://www.guardian.co.uk/business/2010/feb/16/genel-enerji-record-fine
