The Financial Services Authority has fined former Body Shop IT
professional John Shevlin £85,000 for market abuse.
Shevlin was employed as an IT technician at The Body Shop. On 10
January 2006, says the Financial Services Authority (FSA), he
established a "short position" equivalent to 80,000 Body Shop
shares through a
Contract
for Difference.
In effect, he was betting the share price would fall. This trade
was made on the basis of inside e-mail information he was not
entitled to view.
Shevlin "closed out" his Contract for Difference ("CFD")
position the next day 11 January 2006, after The Body Shop
announced its poor Christmas trading results to the market. But
Shevlin made a profit of £38,472 on the share deal.
Shevlin had borrowed £29,000 - more than his annual salary - to
enable the trade, which could have resulted in serious financial
hardship had it gone against him.
Shevlin had obtained the inside information by improperly
accessing confidential e-mails of senior executives of The Body
Shop.
The e-mails contained details of The Body Shop's Christmas
trading results and a draft announcement that The Body Shop had
underperformed to expectations.
Margaret Cole, FSA director of enforcement, said: "Mr Shevlin
deliberately set out to obtain highly sensitive and valuable
information to which he was not entitled.
"He abused the trust placed in him by his employers and misused
his technical skills to gain a financial advantage over other
market users. Firms must take steps to protect market sensitive
information. Where individuals circumvent these protections they
should expect to face significant financial or other
sanctions."
No fault has been attributed to The Body Shop by the FSA and
Shevlin has ceased to be an employee.
A Contract for Difference is a contract between two parties
where the buyer will receive from (or pay to) the seller, the
difference between the value of a company's share at expiry and its
value at the time of the contract.
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