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The Financial Services Authority has today fined Sean Pignatelli £20,000 for failing to exercise due skill, care and diligence and to observe proper standards of market conduct when carrying out his function as an approved person. This breaches Principles 2 and 3 of the FSA's Statements of Principle for Approved Persons.
Mr Pignatelli, who was employed as a US equity salesman at Credit Suisse First Boston (Europe) Limited (CSFBE), received an analyst's email on 24 May 2005 at about 6.32pm concerning a US company called Boston Scientific Corporation (BSX). The email was worded in such a way as to appear that it might have contained inside information about BSX's prospects, including phrases such as: "quick heads up ahead of tomorrow's analyst meeting", that the author of the e-mail had "Just sat down" with BSX's CEO and "Don't want to get in trouble ….keep btwn us for now". The email did not in fact contain inside information.
He acted without due skill, care and diligence when, despite these warning signals, he failed to consider whether or not the email might have contained inside information and as a result he did not discuss the email with his senior manager or compliance as required by CSFBE's procedures.
Despite the warning signals in the email, at 6.38pm he embarked on a series of calls to clients passing on this information. During these calls he used language that embellished the information in such a way that the FSA considers that he gave the impression that the email contained inside information. By passing on the information in this manner he failed to observe proper standards of market conduct.
Sally Dewar, FSA Director of Markets, said:
"We are grateful to the firm for bringing this case to our attention having detected it through its usual compliance procedures. This case demonstrates the importance we attach to market participants giving due care and attention to the impact on the quality of markets of the information they disseminate.
"Whenever salesmen receive material which appears to contain inside information, they should stop and think before passing it on and, where appropriate, discuss it first with their senior manager or compliance.
"Mr Pignatelli failed to consider whether or not he had received inside information before he embarked on a series of calls during which he passed on that information. Further, the way in which he passed on the information gave the impression albeit unintentionally that he was passing on inside information."
In reaching its decision, the FSA has taken into account the fact that Mr Pignatelli did not have a positive belief that the information he had received was inside information. Mr Pignatelli has also co-operated with the FSA, he has agreed to settle this matter and he has not previously been the subject of FSA disciplinary action.
Background
- The Final Notice is published on the FSA website.
- Principle 2 of the FSA's Statements for Approved Persons states: "An approved person must act with due skill, care and diligence in carrying out his controlled function".
- Principle 3 of the FSA's Statements for Approved Persons states: "An approved person must observe proper standards of market conduct in carrying out his controlled function".
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
