The Financial Conduct Authority (FCA) has banned former investment consultant Rahul Shah for encouraging another person to engage in behaviour which, if engaged in by Shah, would amount to market abuse.
In addition to Shah's full prohibition, the FCA would have imposed a fine of £125,000 but for Shah's financial position.
The FCA found Shah deliberately encouraged another person to purchase shares in Vyke Communications whilst Shah was himself in possession of inside information regarding Vyke.
Shah had contractual agreements which meant he stood to receive 40% of any profit made from the purchase of the Vyke shares.
He had been given inside information about Vyke on two separate occasions, on 16 and 30 June 2010.
The inside information concerned a joint venture agreement to be entered into by Vyke.
Following receipt of the inside information on 30 June, Shah encouraged another person to buy Vyke shares by telling that person that a broker acting for Vyke recommended the purchase of Vyke shares, on the basis of which Vyke shares were purchased.
The FCA considers that Shah's behaviour was deliberate and that he has, therefore, demonstrated a serious lack of honesty and integrity.
As a result of this, the FCA has decided that Shah should be prohibited from performing any function in relation to any regulated activity carried on by any authorised or exempt person or exempt professional firm on the grounds that he is not a fit and proper person.
The FCA believes that the sanction reflects the serious nature of Shah's behaviour and should act as a deterrent to other market participants.
FCA director of enforcement and financial crime Tracey McDermott said: "Confidence in markets depends on investors knowing they are operating on a level playing field.
"Inside information is a valuable commodity and must be treated as such. Exploiting that information whether to make investment decisions or to encourage others to do so gives an unfair advantage. Where this happens we will take firm action."
Shah had referred his case to the Upper Tribunal, but withdrew his reference on 5 November 2013.
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