Genel Enerji chief executive Mehmet Sepil received a £967,005 fine, the largest given by the FSA against an individual for market abuse, after dealing in the shares of UK listed Heritage Oil on the basis of inside information.
The firm’s chief commercial officer Murat Ozgul and exploration manager Levent Akca were also fined £105,240 and £94,062 respectively for dealing in Heritage’s shares.
All three fines include the disgorgement of profits that Sepil, Ozgul and Akca made of £267,005, £35,240 and £10,062 respectively, the FSA says.
On March 31, 2009 Genel Enerji entered into a joint venture with Heritage regarding the exploration of the Miran oil field in Kurdistan and all three executives were actively involved in the project.
As a result of the joint venture, Genel Enerji received detailed daily reports from Heritage of the drilling tests at Miran from April 17, 2009 until May 3, 2009 when the testing concluded.
While it was publicly known that Heritage was testing at Miran, the progress and results of the tests were confidential and highly sensitive.
On May 4, 2009, Sepil, Ozgul and Akca flew to London together to attend a series of meetings. They also discussed the positive test results. The next day, they all contacted their brokers and purchased shares in Heritage.
On May 6, 2009, Heritage announced the results of the Miran testing as a “major oil discovery” with oil-in-place of between 2.3 to 4.2bn barrels.
Following the announcement, Heritage’s share price increased by approximately 25 per cent. On the day of the announcement, Sepil, Ozgul and Akca sold all their Heritage shares at a profit.
FSA director of enforcement Margaret Cole says: “The penalties the FSA has imposed as a result of this investigation send a clear message to companies and individuals wherever they are based that dealing with the benefit of inside information is not acceptable.
“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.”
Three months after the trading Sepil, Ozgul and Akca voluntarily contacted the FSA expressing remorse and made certain admissions concerning the basis for their trading.
At an early stage, all three individuals offered disgorgement of the profits they had made.
The FSA says it recognises that none of the executives set out to commit market abuse, adding that their co-operation and early offer of disgorgement were also taken into account in determining the appropriate outcome.