The UK financial regulator has fined and banned a corporate financier who became a public relations consultant after he used inside information from a company he advised to make a £100,000 profit.
The Upper Tribunal yesterday directed the Financial Services Authority (FSA) to fine David Massey £150,000 ($NZ313,000)and ban him
from any role in regulated financial services "for engaging in market abuse" after he had appealed an FSA decision made two years ago.
The regulator said Mr Massey had short sold 2.5 million shares in the now-collapsed digital media group Eicom in November 2007 at 8p, knowing that the company was to issue new shares at 3.5p each.
Massey had acted as a financial PR consultant for Eicom on and off for five years, as well as being a corporate finance executive at investment banking company Zimmerman Adams International. His role had included discussions over the company potentially raising money in the markets just months before.
Massey subscribed to the new shares "within a matter of minutes", the FSA added, to close out his short position and make a net profit of £100,000 in the process. He initially tried to book the transaction to an associate's account and told Zimmerman Adams' compliance advisers that he hardly knew Eicom.
Margaret Cole, the managing director of enforcement and financial crime at the FSA, said the corporate financier's actions "were unacceptable. He abused his position... by acting in a personal capacity and failing to inform the buyer that they would be buying new shares issued at a significant discount to the market price, keeping all the profit for himself.
"Massey used the trust invested in him by both parties to create the opportunity to trade on the basis of inside information and he distorted the truth to hide his actions, profiting at the expense of other market users," Cole said. "This type of conduct threatens the integrity of the market and will not be tolerated by the FSA."
The FSA ruling in December 2009 had imposed a fine of £281,000, but the tribunal took a more lenient view and the sum was almost halved after the appeal.
The tribunal did not believe he traded knowing he was committing market abuse, as the FSA did. It said instead he had "by a process of wishful thinking, persuaded himself on inadequate grounds" that he was entitled to trade as he did.
The ruling "should not be regarded as a lifetime ban", the tribunal said, " if Mr Massey is able in the future to rehabilitate himself".
Massey, who has worked as a fund manager, is the author of books including The Investor's Guide to New Issues.
THE INDEPENDENT
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The UK financial regulator has fined and banned a corporate financier who became a public relations consultant after he used inside information from a company he advised to make a £100,000 profit.
The Upper Tribunal yesterday directed the Financial Services Authority (FSA) to fine David Massey £150,000 ($NZ313,000)and ban him
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