The Financial Services and Markets Tribunal has fined private investor Andre Jean Scerri £66,062 for market abuse.

The fine represents disgorgement of profits made through the use of inside information and a penalty of £20,000 for engaging in market abuse. The tribunal’s decision increases the penalty of £46,063 originally imposed by the Financial Services Authority (FSA).

Scerri was a private investor in Amerisur Resources Plc (then known as Chaco Resources Plc).

On 23 May 2007, Scerri placed an order to increase his existing position in Amerisur. Subsequent to this, another private investor contacted Scerri and informed him of a placing of Amerisur shares to be announced the following day, at a substantial discount to the market price.

As a result, Scerri cancelled his buy order and began to sell his existing position. He was subsequently contacted by Amerisur’s broker who formally made him an insider and invited him to participate in the placing.

Scerri sold the remainder of his existing Amerisur position prior to the public announcement of the placement. He then rebuilt the majority of his position in Amerisur by subscribing for discounted shares in the placing. 

The amount disgorged principally represents the difference between the price at which Scerri sold his shares, and the discounted price at which he repurchased the majority of his position.

The FSA originally decided not to impose the penalty of £20,000 on Scerri, on the grounds that it would cause serious financial hardship.

However, the FSA presented evidence to the tribunal that the information Scerri had provided in connection with his financial hardship claim was incomplete and misleading. Also, after being notified of the proposed penalty by the FSA, Scerri had invested and lost substantial funds through hundreds of trades in indices and currencies.
 
Margaret Cole, managing director of enforcement and financial crime at the FSA, said: 'Scerri profited from other, unwitting investors who did not have that [insider] information. Retail investors who are given inside information must observe, like any other market participant, the responsibilities this information brings.
 
'The tribunal’s decision to impose a financial penalty on Scerri in addition to the disgorgement, serves as a reminder to all that financial hardship claims will not succeed where assets have been frittered away.'