The full texts of the Final Notices for Mr Robin Hutchings and Mr Jason Smith, dated 13 December 2004, are available on the FSA website. These include the background to the case, the relevant statutory provisions and the regulatory requirements contravened and the factors taken into account by the RDC when setting the level of the fine.
Andrew Procter, Director of Enforcement at the FSA, said:
"The selective dissemination of confidential information and its misuse by market participants will not be tolerated by the FSA.
"We have previously taken action against those who misuse relevant information for personal gain; however this action demonstrates that we view equally seriously the activities of those who pass on that information. This action should concentrate the minds of all those who handle relevant information on their responsibilities.
"The conduct of these individuals has fallen some way short of the standards expected by the FSA of market participants, whether FSA approved or not. Our action against Messrs Hutchings and Smith brings to six the number of individuals we have fined for committing market abuse this year."
FSA Investigation
During the period March to May 2003 IFG was involved in takeover talks with Dennis Publishing Limited (Dennis); these resulted in Dennis taking over IFG in May 2003. Mr Smith was involved in these negotiations as company secretary and finance director of IFG, while Mr Hutchings was an FSA approved person working as an equity analyst at Evolution Beeson Gregory at the time.
Mr Hutchings and Mr Smith knew each other as friends and former colleagues and were in frequent contact throughout April 2003 by phone, text and emails.
On 11 April Mr Hutchings initially bought 114,942 shares in IFG. Messrs Smith and Hutchings exchanged 11 text messages on 14 April during which Mr Smith may have told Mr Hutchings to look out for an announcement the next morning concerning a potential offer, which was clearly relevant information. IFG released an RNS announcement at 10.37 on 15 April confirming that they had received an approach which may lead to an offer for the company. The company's shares rose by about 29% from 4.25p to 5.5p.
Mr Hutchings then contacted Mr Smith, on 28 April, by email looking for information on the progress of the takeover talks; Mr Smith confirmed that the bid from Dennis had been accepted at an offer price of 8p per share. On receipt of this information Mr Hutchings bought: 80,000 shares on 28 April for 6.25p; 80,000 on 29 April at 6.25p; and 166,666 shares at 6p on 30 April. He did not consult his compliance department about any of these purchases, although he was aware that he was in possession of price sensitive information, and deliberately staggered his share purchases to avoid detection. Mr Hutchings made a profit of just under £5000 on 6 May when he sold the shares that he had purchased on 28, 29 and 30 April.
Mr Hutchings has co-operated with the FSA by agreeing to settle the matter and but for this his fine would have been substantially larger.
