The Financial Services Authority (FSA) has today fined Mr Alexei Krilov-Harrison, a former stockbroker at Pacific Continental Securities UK Ltd (PCS), £24,000 for using inside information about an AIM-traded company to encourage his clients to buy its shares.
On 28 March 2007, Krilov-Harrison received inside information that Provexis Plc (Provexis), an AIM-traded company, had signed a major contract with an international food company. The announcement was due to be released to the market in two days and the company's share price was expected to increase as a result.
Over the course of the next 24 hours, Krilov-Harrison made three calls to clients in which he disclosed that Provexis was going to announce a major contract shortly which would make its share price ‘jump up substantially’. Using the inside information, he encouraged some of his clients to buy Provexis shares.
On 30 March 2007, Provexis announced the new contract and its share price increased by 19.81% from the closing price on the previous day.
Krilov-Harrison committed market abuse by using inside information about the announcement and the likely impact on Provexis’ share price as part of his sales tactics for persuading clients to buy shares. The FSA found that Krilov-Harrison’s actions had been deliberate and been motivated by his desire to get a bonus.
Margaret Cole, director of enforcement and financial crime at the FSA, said:
“Anyone who uses inside information to encourage their clients to buy
shares is abusing their privileged position and cheating other honest investors.
This is plainly wrong. Market participants must ensure they do not pass
inside information to their clients in these circumstances.
“We are committed to tackling market abuse in its various guises and will not
hesitate to take action to ensure that the UK markets operate in a fair,
efficient and orderly way for all investors.”
In determining the appropriate amount to fine Krilov-Harrison, the FSA took into account the poor regulatory and compliance culture at PCS as well as his financial circumstances. He also settled at an early stage of the investigation and received a 20% discount.