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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