Britain's financial regulator has imposed a record fine for an individual, billing a Turkish oil executive over almost £1m for insider trading in shares of London-listed Heritage Oil Plc.
The Financial Services Authority (FSA) said it had fined Mehmet Sepil, chief executive and 44% owner of oil explorer Genel Enerji, £967,000. Genel Enerji's chief commercial officer Murat Ozgul and Levent Akca, its exploration manager, were also fined.
Sepil bought Heritage shares after he was told the company had made a large oil strike in the semi-autonomous Kurdish region of Iraq. A day later, Heritage announced the 2.3 to 4.2 billion barrel find, lifting its shares 25%.
Sepil sold his holding at a £267,000 profit while Ozgul and Akca, who were fined £105,000 and £94,000 respectively, profited to the tune of £35,240 and £10,062.
The men said in a statement they were unaware their actions broke any rules. The FSA said it had decided against launching criminal proceedings because it accepted their pleas, they came forward voluntarily, co-operated fully and 'genuinely showed contrition and remorse'.
Unlisted Genel is Heritage's partner in the Miran field in Kurdistan and, as is common practice, the Jersey-based explorer, run by former mercenary Tony Buckingham, shared the information about the find with Genel before informing the market.
Genel and Heritage later agreed a merger, which they said would create a $6 billion company and member of the FTSE 100 index of leading UK companies. Sepil was to head the enlarged group.
But before the deal could be consummated, the FSA stepped in and told Heritage there would be problems with certain members of the Genel team taking leadership roles at a UK-listed company. Heritage dropped the deal.
The FSA, which has faced criticism for doing little to halt insider trading in the UK, has been talking-up a tough enforcement policy and in 2009 levied a record level of fines.
But although the regulator has said it is keen to use its criminal powers to clamp down on insider dealing rings by imposing prison sentences rather than fines, there were only two criminal cases resulting in four convictions last year.
Some lawyers noted the oil exploration sector lent itself to disciplinary cases because exploration occurs thousands of miles away and those privy to inside information genuinely do not always realise they are prohibited from trading.
