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FSA/PN/133/2008
13 November 2008

The Financial Services Authority (FSA) has fined Mr Richard Ralph, the former British ambassador to Peru and the former executive chairman of AIM-listed mining company, Monterrico Metals Plc (Monterrico), £117,691.41 and his friend Mr Filip Boyen £81,982.95 for dealing in Monterrico’s shares on the basis of inside information.

The financial penalties for Mr Ralph and Mr Boyen are made up of the disgorgement of their profits and additional penalties of £105,000 and £52,500 respectively.

On about 28 January 2007, Mr Ralph asked Mr Boyen to buy £30,000 worth of Monterrico shares on his behalf.  At this time a takeover offer had been agreed in principle at a considerable premium to the existing share price.  Although it was publicly known that the company was in takeover discussions the details of those discussions were confidential and highly sensitive.  Mr Ralph was actively involved in the takeover discussions and knew he was not allowed to deal in the company’s shares.  Mr Ralph asked Mr Boyen to buy the shares to hide the fact that he was dealing and in doing so recklessly disclosed inside information to Mr Boyen about his intention to deal. 

Between 29 January and 2 February 2007 Mr Boyen, with the benefit of inside information from Mr Ralph, bought Monterrico shares worth £77,162.05 for himself and shares worth £30,533.59 for Mr Ralph.  On 5 February 2007, a Chinese mining consortium announced a takeover agreement with Monterrico.  After the announcement, Mr Boyen sold all the Monterrico shares making a profit of £12,691.41 for Mr Ralph and a profit of £29,482.95 for himself.

Following the FSA’s enquiries into suspicious trading prior to Monterrico’s takeover Mr Ralph voluntarily contacted the FSA and admitted to dealing with the benefit of inside information.

Margaret Cole, director of enforcement at the FSA, said:

"Mr Ralph held a position of trust as the executive chairman of Monterrico but he deliberately used inside information about his company’s takeover for financial gain.  Mr Boyen misused inside information about Mr Ralph’s secret dealing to his own advantage by buying more shares for himself.  This sort of self-serving behaviour by experienced business professionals has the potential to damage confidence in financial markets.

"Mr Ralph and Mr Boyen co-operated fully with our investigation by coming forward and providing us with information about market misconduct and as such we were more lenient.  But for that co-operation, we would have seriously considered taking criminal proceedings."

In determining the final penalty, the FSA took into account Mr Ralph and Mr Boyen’s extensive co-operation and that they settled at an early stage of the investigation.  Their financial penalties were reduced by 30% under the FSA settlement discount scheme.

 Notes for editors

1. The Final Notices relating to Mr Ralph and Mr Boyen are available from the FSA website.
2. These are the third and fourth fines the FSA has imposed for market abuse this year.  On 8 September 2008, the FSA fined a hedge fund manager £52,500 and on 1 July fined an IT professional £85,000 for market abuse.
3. The conduct of Monterrico Metals Plc and the Chinese mining consortium is not in any way subject to criticism.
4. The FSA consulted in Consultation Paper 08/10 dated May 2008 on proposals to formalise its policy for dealing more leniently with suspects who assist market misconduct investigations.  Feedback on that consultation is due to be published in December 2008.
5. 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.
6. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.