WIREDGOV

The Financial Services Authority (FSA) has fined John Shevlin £85,000 for market abuse.

John Shevlin was employed as an IT technician at the Body Shop International plc ("The Body Shop"). On 10 January 2006 he established a short position equivalent to 80,000 Body Shop shares through a Contract for Difference ("CFD"), in effect betting that the share price would fall. This trade was made on the basis of inside information. Mr Shevlin closed out his CFD position on 11 January 2006 after the Body Shop announced its Christmas trading results to the market and made a profit of £38,472.

Mr Shevlin borrowed £29,000 (more than his annual salary) to effect the trade, which could have resulted in serious financial hardship had it gone against him. Mr Shevlin obtained the inside information by improperly accessing confidential emails of certain senior executives of The Body Shop. The emails contained details of The Body Shop’s Christmas trading results and a draft announcement that the Body Shop had underperformed expectations.

Margaret Cole, FSA’s 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, whether or not they are approved by the FSA."

In reaching its decision, the FSA has taken into account that there have been no previous findings of market misconduct against Mr Shevlin. No fault has been attributed to The Body Shop and Mr Shevlin has ceased to be in their employ.

Notes for editors

1. A CFD 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. The buyer could also have the option to buy the shares at the later date although the CFD does not confer a right to buy them. The holder of a CFD on a company's shares has an economic interest in the company, without direct ownership of shares in the company.
2. The Final Notice can be viewed on the FSA website.
3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
4. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.