Market abuse: FSA levels its largest fine yet against an individual: Mehmet Sepil, the chief executive officer of a Turkish oil exploration company, Genel Enerji


The fine was imposed against Mehmet Sepil, the chief executive officer of a Turkish oil exploration company, Genel Enerji, for dealing in the shares of its joint venture partner, UK listed Heritage Oil Plc, on the basis of inside information. The inside information related to highly sensitive, positive, drilling test results at the Miran oil field in Kurdistan, the exploration of which was the subject of the joint venture. Genel Enerji’s chief commercial officer, Murat Ozgul and Levent Akca, its exploration manager were also fined.

Mehmet Sepil’s fine amounted to £967,0005 (including a £267,0005 disgorgement of profits) after a 30% early settlement discount. Murat Ozgul and Levent Akca respectively received fines of £105,240 (disgorgement of profits of £35,240) and £94,062 (disgorgement of profits of £10,062). The fact that the individuals approached FSA themselves, disclosed details of their conduct, co-operated and did not intend to commit market abuse will have been important facts the FSA will have taken into account in deciding that the civil market abuse procedures were appropriate in this instance.

Margaret Cole, director of enforcement at the FSA, said:

“The penalties the FSA has imposed as a result of this investigation send a clear message to companies and individuals wherever they are based that dealing with the benefit of inside information is not acceptable.”

“The FSA expects those entrusted with inside information no to betray that trust. We will not tolerate the abuse of a privileged position to make a personal profit at the expense of other market participants and these penalties underline our commitment to combating this behaviour.”

This latest development is very much an indication of the FSA’s continuing drive to get tough on insider dealing and market abuse in pursuance of its “credible deterrence” strategy but also shows that it will impose significant civil fines, as well as continuing to bring criminal proceedings, where it considers the circumstances merit it. It also illustrates that where FSA feels that behaviour is abusive or threatens the integrity of markets, it will take action regardless of the location of the individuals or the industry in which they operate. The fine further serves to demonstrate how FSA takes into account the offender’s conduct after the offence and the nature of the misconduct in determining whether to take criminal or civil proceedings. However FSA has made it clear that it will continue to pursue its aim of increasing the number of criminal prosecutions it brings for insider dealing, as the current trial of Malcolm Calvert at the Southwark Crown Court illustrates.