On 1 November 2007, Massey short sold 2.5million shares of Eicom, the then AIM-listed digital broadcaster, at 8p per share on the basis of the inside information that Eicom was intending to issue new shares at 3.5p per share. Within a matter of minutes he accepted an offer to subscribe for 2.6 million newly issued Eicom shares at 3.5p and used the shares he obtained to close his short position, making a net profit of over £100,000.
Massey, then a Corporate Finance Executive at Zimmerman Adams International, had also occasionally acted as a financial PR consultant for Eicom for approximately five years, sometimes receiving payment from Eicom for his services. In and after June 2007 Eicom was in discussion with Massey about its need for further funds for a possible acquisition. At the time of his short sale of Eicom shares, Massey knew that Eicom was prepared to issue up to 3million shares to him at a substantial discount.
Following the trading, Massey initially tried to book the transaction to the account of an associate and, when questioned about the deal by Zimmerman Adams International and its compliance advisors, he gave the impression that he hardly knew Eicom.
Margaret Cole, managing director of the enforcement and financial crime at the FSA, said:
“Massey’s actions were unacceptable. He abused his position as an FSA approved person by acting in a personal capacity and failing to inform the buyer that they would be buying new shares issued at a significant discount to the market price, keeping all the profit for himself.
“Massey used the trust invested in him by both parties to create the opportunity to trade on the basis of inside information and he distorted the truth to hide his actions, profiting at the expense of other market users. This type of conduct threatens the integrity of the market and will not be tolerated by the FSA.”