It must have come as quite a shock to the FSA apparatchiks when Ian Hannam turned on them. The accepted procedure following the ritual humiliation, fine and brutal publicity that accompanies a critical report is for the miscreant to issue a more-in-sorrow-than-anger statement, and express a desire to move on. Hannam, though, is made of sterner stuff, and the FSA will now be forced to justify its action in front of an independent tribunal.

It promises to be quite a scrap. The 24-page Decision Notice is not one of the FSA’s finest documents. The logic is thin, relying on arguments like:

Although Mr Hannam had implicit authority to make the disclosure of the information contained in the September email to Mr A, and was acting in his client’s interests, he did not consider whether he was disclosing inside information, or whether it was necessary to disclose the information in order properly to discharge his responsibilities to his client.

So he had authority and was acting in his client’s interests, but is guilty of “not considering” whether his remark qualified as inside information. An estate agent trying to sell a house would hardly be acting in his client’s best interests if he failed to encourage other potential buyers. The “inside information” in this email was this: “They are very excited about the recent drilling results”, something  that would have been disclosed to any other party making an approach. Nobody abused the information, and there is no suggestion of any improper trading in Heritage Oil, Hannam’s client.

The central curiosity in this affair are the identities of Mr A, “a representative of an organisation with interests in Kurdistan”  and Mr B, “a businessman with interests in Kurdistan” who was blind-copied into the second email to Mr A, the one containing the sign-off “Tony [Heritage’s boss] has just found oil and it is looking good.” This is closer to inside information than “very excited” but as a smoking gun it looks more like a pea-shooter than a Magnum.

We are told nothing more about Messrs A and B except that they were “clients and contacts” of Hannam (which may not be entirely accurate). This begs the question of who snitched to the FSA, and why? Nobody with Hannam’s record of pulling off big, tricky deals in unstable places would have done so without making enemies, and here’s a curiosity. This is not the first time those connected with Heritage Oil have tangled with the FSA. In Febrary 2010, it fined Mehmet Sepil, the hugely wealthy former boss of Genel Enerji  for trading in Heritage shares in 2009, just a few months after Hannam’s heinous crime. Sepil pleaded innocence of the rules, co-operated fully and disgorged his gains.

The wider point is that markets, which run on rumour as surely as a car runs on petrol, can never be black and white, as the FSA aspires. Nearly all information is a shade of grey, a mixture of fact and gossip, and for every rumour that is subsequently confirmed there are half a dozen which simply fade away because they turn out to be baseless. The FSA, like everyone else, must use its judgment about what it learns. In this case, it may have misjudged its man, and if the tribunal knocks it down, its penalty will be much more than a mere fine.