The Financial Services Authority (FSA) has fined Mr Darwin Lewis Clifton OBE £59,500 and has fined Byron Holdings Ltd (Byron) £86,030 for dealing in the shares of Desire Petroleum plc (Desire) on the basis of inside information.
Desire is an AIM-quoted company of which Mr Clifton is a non-executive director. Mr Clifton is also a director and one-third shareholder of Byron.
Between 19 November 2007 and 8 February 2008 Mr Clifton directed Byron to buy shares in Desire on four separate occasions when he had inside information from his position as a non-executive director of Desire.
Mr Clifton did not consider at the time whether the information he was given was inside information and he failed to consider the clear and obvious risk that Byron would be committing market abuse by purchasing the shares before the information was generally available.
Margaret Cole, director of enforcement said:
"Mr Clifton held a position of trust as a non-executive director of
Desire, but he fell short of the high standards expected of someone in that
position. Senior people at publicly quoted companies should ensure that
they understand when material is inside information and do not trade when they
have it. If they fail to do this they can expect the FSA to impose
substantial financial or other sanctions, even where they have not deliberately
set out to commit market abuse."
In determining the financial penalty, the FSA took into account the fact that Mr Clifton’s conduct was not deliberate. He cooperated fully with the FSA’s investigation and settled at an early stage of the investigation. In doing so, he qualified for a 30% reduction to his fine which would have otherwise been £85,000.
Whilst Byron had been pursuing the strategy of increasing its Desire shareholding over the long-term, the inside information was a material influence on the timing of its share purchases. It has not sold the shares.