The Chief Executive Officer of a Turkish oil exploration company called Genel Enerji (Genel) has been fined £967,000 for dealing in the shares of Heritage Oil Plc (Heritage) on the basis of inside information. In addition Genel’s Chief Commercial Officer and Exploration Manager were each fined £105,240 and £94,062 respectively. The fines included the disgorgement of profits of £267,005, £35,240 and £10,062 respectively.
Having entered into a joint venture with Heritage regarding an oil exploration project in Kurdistan in March 2009 and signed a confidentiality agreement, the three executives of Genel were actively involved in the project and received daily reports of drilling tests. During the course of a trip to London on 4 May 2009 they became aware that the drilling tests results were positive.
Each executive instructed their brokers to purchase shares in Heritage. Following the announcement of the testing results on 6 May 2009, the share price of Heritage rose by approximately 25%. The same day, each executive instructed their brokers to sell their holdings in Heritage shares, making a substantial profit.
Acting on legal advice, the individuals voluntarily disclosed their dealings to the FSA, expressed remorse for their conduct and offered the disgorgement of their profits. The FSA acknowledged that the executives did not set out to commit market abuse and were not familiar with the legal requirements which prohibited the dealing. Nonetheless, the FSA noted that each executive was experienced and held a position of responsibility, were aware of the likely effect of the announcement and emphasised the need to deter the executives and others from engaging in market abuse.
View Three Turkish oil company executives fined £1.16 million for market abuse, 15 February 2010