Top City Rainmaker 'Forfeited £30m Bonuses'

A top investment banker was forced to relinquish up to £30m in bonuses from the Wall Street firm JP Morgan (Other OTC: JPYYL - news) after being accused by City watchdogs of improperly supplying inside information about a major oil deal.

Sky News has learnt that Ian Hannam, who was given the soubriquet "the king of mining mergers and acquisitions" because of his track record putting together multibillion pound takeovers, gave up the previously undisclosed sum when he left JP Morgan last year.

His departure followed a £450,000 fine and censure imposed by the Financial Services Authority (since renamed the Financial Conduct Authority) for market abuse, allegations that Mr Hannam is disputing at a tribunal which got underway on Tuesday morning.

The £30m figure is not expected to be made public at Mr Hannam's tribunal, although a statement released by him on Tuesday referred to him foregoing "substantial sums in the form of bonuses for 2008/9 as part of the arrangements for terminating his employment with JP Morgan".

Senior sources at JP Morgan said the £30m number was "at the top of a range" of potential payouts to Mr Hannam based on subsequent calculations of his and JP Morgan Cazenove's performance.

It comprised approximately half of his deferred bonuses accrued over a three-year period, part of his bonus for 2009, when the regulator's investigation into him got underway, and a multimillion pound payment relating to the full takeover of JP Morgan Cazenove, the investment banking joint venture that Mr Hannam helped to establish, by the Wall Street giant.

Mr Hannam is disputing the FCA's case on the grounds that the information he disclosed to Kurdistan's oil minister about his client, Heritage Oil (Toronto: HOC.TO - news) , did not constitute market abuse both because it was not "inside information" under the legal definition of the phrase and because there was no evidence of any trading based on its disclosure.

His legal team is also arguing that Mr Hannam's subsequent move to act as a whistleblower when he became aware of potentially improper trading in Heritage Oil shares demonstrated his properiety.

The FCA has not alleged that Mr Hannam, who floated a string of FTSE-100 companies on the London Stock Exchange (LSE: LSE.L - news) , acted without integrity and has accepted that he did so with honesty.

In his statement, Mr Hannam, who has become involved in a string of business ventures since leaving JP Morgan - with the blessing of the City regulator - said: "I do not believe that I broke the rules on inside information. On the contrary, I was acting in the proper course of my employment as a corporate financier, pursuing a transaction on behalf of my client, Heritage Oil & Gas. But that is ultimately for the Tribunal to decide.

"The case raises questions about the definition, and treatment of, inside information on the corporate finance side of the ‘Chinese Wall’ and clarification by the Upper Tribunal is important for London as a global financial centre."

Since his fine was announced last year, many City lawyers and analysts have expressed bewilderment about the regulator's stance and argued that its decision to pursue Mr Hannam while accepting that he acted honestly has triggered uncertainty about the disclosure of privileged information.

Mr Hannam will pay his own legal fees - expected to run to roughly £1m - regardless of the outcome of the tribunal, insiders said.