* FSA bags biggest scalp to date
* Removes doubt over campaign against abuse
* Two top FSA staff have departed
By Huw Jones
LONDON, April 3 Bagging its biggest banking
scalp to date helps the Financial Services Authority show its
aggressive push to stamp out market abuses remains on course
despite the departure of two top officials.
The British regulator fined Ian Hannam, one of London's most
prominent bankers, 450,000 pounds ($720,000) on Tuesday for
passing on inside information, a large sanction for an
Hannam resigned from his job as JPMorgan's Global Chairman
of Equity Capital Markets and will appeal.
The FSA said it was the latest "crossing the wall" case,
meaning commercially sensitive information was divulged that
could have been used to trade on unfairly.
In recent weeks the FSA's Chief Executive Hector Sants and
top enforcer Margaret Cole have announced their departures ahead
of a shake-up in the British financial regulatory framework.
Together they authored the FSA's "credible deterrence"
strategy of pursuing rule breakers more aggressively and
supervising firms more intrusively than in the watchdog's
pre-crisis "light touch" past.
News of the departures raised hopes of a more emollient FSA
but reining in one of the most well-known and colourful bankers
in London will quash such expectations.
"Based on the details we have and what the FSA have been
saying for a while, it's more of the same today," said Lucy Frew
of law firm Gide Loyrette Nouel.
"It's always good for the FSA to be showing this remains
their stance following the news of Margaret Cole's departure,"
Hannam is the fifth person to be fined for improper
disclosure this year by the regulator, which has previously been
accused of being ineffectual against financial crime.
So far this year, the FSA has levied 24 million pounds in
fines in just over three months, compared with 5.3 million
pounds in all of 2007, when Cole joined.
Regulators may get powers from next year to warn investors
earlier in an enforcement process about concerns over a company
The FSA is being scrapped in 2013 as part of a
reorganisation to learn lessons from a financial crisis that saw
the Northern Rock bank nationalised, and the taxpayer having to
bail out Lloyds and RBS, partly due to
The FSA's aggressive "credible deterrence" policy is a
response to this bruising legacy.
Cracking down on market abuse, as with Hannam, is an area
the FSA has been putting more effort into over the past year or
so, though such cases can take a long time to come to fruition.
"The FSA has come under lot of political pressure to use its
powers more and get more convictions for market abuse," said
Charlotte Hill, a partner at Stephenson Harwood, a law firm.
"I would imagine the FSA will have a think about whether
they want to bring criminal actions against Hannam as well,"
She said the FSA rarely loses appeals in the Upper Tribunal,
where Hannam plans to take his case.
"When appealed at this level I don't rate his chances. This
goes to the heart of what regulation worldwide is trying to
stamp out," Hill added.
Unexplained market moves in shares of companies ahead of
merger announcements fell sharply to just over a fifth in 2010,
a drop the watchdog believed showed its tougher policies were
The FSA has been taking a harder stance on several fronts
and fines have reached record highs.
Failure to keep proper records and ensure safekeeping of
client funds have been a target for the enforcers.
It has also been taking a closer look at whether candidates
who want to be non-executive board members at banks actually
understand finance and are up to challenging executives.
Several candidates have withdrawn to avoid the shame of
being turned down.
The FSA is also taking a closer look at financial products
before they come to the market in a bid to end the country's
20-year litany of mis-selling scandals that have cost the
industry more than 15 billion pounds in compensation.
Its successor, the Financial Conduct Authority, will have
powers to ban products from next year.
"They are being very much more intrusive and harder on firms
and some of my clients say it's distracting them from the day
job dealing with endless questions and requests for documents
which is not helping to stamp out malpractice," Hill said.