Ex-JP Morgan Cazenove banker Ian Hannam has lost his battle with the Financial Conduct Authority over a £450,000 fine for market abuse.
The fine follows the judgment of the Upper Tribunal, which upheld an FCA decision that Mr Hannam engaged in two instances of market abuse by disclosing inside information other than in the proper course of his employment, in two emails dated 9 September and 8 October 2008.
The allegations centred on his client Heritage Oil and his relationship with Kurdistan's oil minister. While the then FSA said when it imposed the fine in 2012 it recognised Hannam did not intend to commit market abuse, it felt someone of his experience and position should have known better.
Dubbed the 'King of Mining', Hannam left his post as chairman of JP Morgan Cazenove Capital Markets shortly after the fine and launched a campaign to clear his name, arguing the regulator was mistaken and that he had acted in agreement with the rules of the City.
Commenting on today's final notice, Tracey McDermott, the FCA’s director of enforcement and financial crime, said: 'This has been a long and complex case but the Tribunal’s substantial judgment is a landmark.
'It should leave market participants in no doubt that casual and uncontrolled distribution of inside information is not acceptable in today’s markets. Controlling the flow of inside information is a key way of preventing market abuse and we would urge all market participants to pay close attention to the judgment.'
Hannam said that after 'careful and considerable thought' he had decided not launch a fresh appeal and accept the fine.
'I now wish to put this difficult period behind me and get on with my business career,' Hannam said in a statement.
'The FCA has an important job to do and I appreciate the efforts that it makes to ensure that the UK financial market remains one of the foremost markets for business in the world.'
He added: 'I am pleased and gratified that, despite the differences in view between us, at no stage, has the FCA ever challenged my honesty and integrity or questioned my belief that I was acting in the interests of my client at the time, Heritage Oil & Gas.
'I am pleased also that at no stage has the FCA ever suggested that I was not a fit and proper person to continue to operate in the financial markets and that my regulatory approvals remain in place.'
Hannam also suggested his case could help provide clarity in what was a grey area for investment bankers.
He said: 'I did not believe the rules on the treatment of inside information had been sufficiently clear or that they clearly applied to my circumstances in the way suggested by the Decision Notice.
'In its lengthy and thorough judgement in May 2014, the Upper Tribunal provided helpful clarification on the issues. The stringent tests that it has declared should be applied to the treatment of inside information will, of course, have implications for all those who work in the City of London’s financial markets.
'I hope that, to this extent, my original referral of the matter to the Tribunal will benefit others who work in this environment, by ensuring that they too are now able better to understand the scope and effect of the relevant rules.'
Legal experts believe the case will keep the FCA on its toes.
'Ian Hannam is one of the few prominent City figures who have challenged an FCA fine,' said Simon Morris of CMS. 'While he didn’t succeed others have, and this gives the FCA the important reminder that all its decisions must be of sufficient quality to sustain judicial scrutiny.'
Ashurst partner Rob Moulton underlined the reputational importance for the FCA that the Upper Tribunal upheld its original decision and the amount of the fine.
'It would have given an unfortunate, mixed, message for the FCA if the Upper Tribunal had found so decisively against Hannam on so many points only for the penalty to reduce to a slap on the wrists,' Moutlon said. 'Now, the FCA can keep up the pressure on how sensitive information is used.'