Ian Hannam, one of JPMorgan Chase & Co. (JPM:US)’s top advisers to mining companies, stepped down to appeal a 450,000-pound ($720,000) fine from the U.K. markets regulator for disclosing inside information.
Hannam, JPMorgan’s global chairman of equity capital markets, e-mailed a potential customer in 2008 with details of a bid for his client Heritage Oil Plc (HOIL), as well as news of an oil find, the Financial Services Authority said in a statement today. The 56-year-old is the most senior banker to be fined by the FSA in its four-year-old crackdown on insider trading.
“I strongly believe, and have been advised by my legal counsel, that the FSA’s conclusions are wrong and I look forward to challenging them,” London-based Hannam said in a separate statement. “The FSA has not challenged my fit and proper status and has accepted that I acted with honesty and integrity.”
He is among bankers advising Xstrata Plc, the subject of a bid from Glencore International Plc (GLEN). At JPMorgan, which also serves as a broker to Xstrata, Hannam helped the mining company first sell shares in 2002, and was involved in many of its subsequent takeovers, including the $18.1 billion purchase of the Canadian nickel producer Falconbridge Ltd. in 2006.
“He has always acted with honesty and integrity,” Xstrata Chief Executive Officer Mick Davis said in a statement today. “He continues to have my full support in his appeal.”
JPMorgan is the third-ranked mergers adviser in Europe this year after Morgan Stanley and Goldman Sachs Group Inc., according to data compiled by Bloomberg. In mining mergers, the bank is placed second after Morgan Stanley, the data show.
The firm was the top-ranked arranger of equity offerings in Europe, the Middle East and Africa in the five years through the end of 2011, the data show. JPMorgan was also the top-ranked manager of IPOs in the region in the period.
“Inside information is extremely valuable and must be handled with care to ensure that it is properly controlled and that appropriate safeguards are observed,” Tracey McDermott, acting head of financial crime at the FSA, said in a statement.
The regulator fined Andrew Osborne, a broker at Bank of America Corp., 350,000 pounds in February for disclosing inside information to Greenlight Capital Inc. Chairman David Einhorn. Osborne told Einhorn the company was about to sell new stock, prompting Einhorn to order traders to sell the firm’s shares ”within minutes,” according to the regulator. Osborne quit and Einhorn and Greenlight were fined 7.2 million pounds by the FSA.
Hannam will complete his current commitments before leaving the bank, Emilio Saracho, the head of investment banking for Europe, the Middle East and Africa, said in a memorandum to employees today. Calls to Hannam’s mobile phone were referred to JPMorgan’s press office. Brian Marchiony, a spokesman for the firm in London, declined to comment beyond the memo.
Hannam sent an e-mail to an unidentified contact on Sept. 9, 2008, in which he said Heritage, a British oil and gas exploration firm, would receive an offer valued at between 350 pence and 400 pence a share, according to the FSA. The stock closed at 204 pence in London that day.
The recipient of the e-mail was a representative of an organization that had interests in the Kurdistan region of Iraq, an area where Heritage had exploration projects, the FSA said. Nine days after the e-mail was sent, Heritage disclosed it was in preliminary talks to sell some assets.
In a second e-mail a month later, Hannam told his contact that Heritage “has just found oil and it is looking good.” Jersey, U.K.-based Heritage announced a find later that month.
No trades were made on the inside information, the FSA said. The recipient of Hannam’s e-mail later hired him to set up a fund for making investments in Kurdistan, the FSA said.
Hannam, a former soldier, graduated from Imperial College London and London Business School, and trained at Salomon Brothers. In 1992, he joined Robert Fleming & Co., which was bought by Chase Manhattan in 2000. Four years later, he helped to set up JPMorgan’s joint venture with London-based Cazenove Group Ltd.
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