The FSA fined Mehmet Sepil, the chief executive officer of Genel Enerji, a Turkish oil exploration company, £967,005 for dealing in the shares of UK listed Heritage Oil Plc on the basis of inside information. This is the largest fine by the FSA against an individual for market abuse.
Genel Enerji’s chief commercial officer, Murat Ozgul, and Levent Akca, its exploration manager, were also fined £105,240 and £94,062 respectively for dealing in Heritage’s shares on the basis of inside information. All three fines include the disgorgement of profits that Sepil, Ozgul and Akca made of £267,005, £35,240 and £10,062 respectively.
On 31 March 2009 Genel Enerji entered into a joint venture with Heritage regarding the exploration of the Miran oil field in Kurdistan. All three executives were actively involved in the joint venture project. As a result of the joint venture, Genel Enerji received detailed daily reports from Heritage of the drilling tests at Miran from 17 April 2009 until 3 May 2009 when the testing concluded. While it was publicly known that Heritage was testing at Miran, the progress and results of the tests were confidential and highly sensitive.
On 4 May 2009, Sepil, Ozgul and Akca flew to London together to attend a series of meetings. They also discussed the positive test results. The next day, they all contacted their brokers and purchased shares in Heritage.
On 6 May 2009, Heritage announced the results of the Miran testing as a “Major Oil Discovery” with oil-in-place of between 2.3 to 4.2 billion barrels. Following the announcement, Heritage’s share price increased by approximately 25%. On the day of the announcement, Sepil, Ozgul and Akca sold all their Heritage shares at a profit.
Three months after the trading Sepil, Ozgul and Akca voluntarily contacted the FSA expressing remorse and made certain admissions concerning the basis for their trading. At an early stage, all three individuals offered disgorgement of the profits they had made. The FSA recognizes that none of the executives set out to commit market abuse. Their co-operation and early offer of disgorgement were also taken into account in determining the appropriate outcome.