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The FCA's Fine on Russel Gerrity
On 19 December 2025, the Financial Conduct Authority (FCA) imposed a fine of £309,843 on Mr. Russel Gerrity, an experienced petrophysical consultant, for engaging in insider dealing.
Mr. Gerrity provided services on a consultancy basis that related to wireline operations for oil and gas exploration companies carrying out test drilling to clients of Gaia Earth Sciences Limited, in which Mr. Gerrity had a 10 percent minority shareholding. Between October 2018 and January 2022 (the Relevant Period), despite being aware of the laws and regulations around insider dealing and receiving the relevant warning and confidentiality notices of being put on an insider list, Mr. Gerrity was found to have breached Article 14(a) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse as amended by the Market Abuse Exit Regulations 2019 (UK MAR), which relates to the prohibition of insider dealing and of unlawful disclosure of inside information.
During the Relevant Period, Mr. Gerrity was found to have engaged in four occasions of insider dealing through which he obtained a direct financial benefit of £128,765:
- On the first occasion, Mr. Gerrity utilized inside information to sell shares to avoid a loss of £1,600 in relation to a drilling operation in Namibia. He did this before the RNS announcement setting out that there was no hydrocarbon accumulation.
- On the second and third occasions, Mr. Gerrity was put on an insider list in regard to positive drilling results. Mr. Gerrity then utilized this information, obtained by virtue of his position, to purchase shares that were then later sold for significantly more following the RNS announcements regarding the drilling results.
- On the fourth occasion, Mr. Gerrity again utilized inside information regarding positive drilling results to purchase shares. Following the RNS announcement on the positive drilling results, the share price rose by 44.01 percent, following which Mr. Gerrity sold the purchased shares for significantly more than the purchase price.
Throughout the Relevant Period, despite warnings from the Disclosure Committees regarding his position on the insider list and access to inside information, Mr. Gerrity abused his access to confidential information by either making a gain or mitigating his losses on share purchases. The FCA assessed the seriousness of the breach at a level four (out of five), which therefore resulted in a multiple of three when assessing the non-disgorgement element of the penalty to be imposed.
Taken together, this enforcement matter reminds us that insider dealing risk is not limited to employees and directors, but extends to consultants, minority shareholders and other third parties that are involved in operational decision making.
Below we outline some key compliance measures to account for when managing third-party risk where inside information is involved.
Lessons Learned in Managing Third-Party Risk Under UK MAR
Insider Risk Extends Beyond Traditional Insiders
A key takeaway from Mr. Gerrity's case is that organizations should not assume that the risk associated with inside information and insider dealing is only within the organization's employees and senior management but that it can extend to third parties such as consultants. This is a particularly important point in the drilling and exploration phase where external consultants are onboarded and have regular access to market sensitive information, such as drilling results, which can have a significant impact on the market share price of the organization. Organizations should therefore ensure that their market abuse training, policies and procedures are appropriately communicated to third parties effectively.
The Punishment is in the Process
Although an organization themselves may not be under investigation or subject to prosecution action for market abuse offences, there are still likely to be significant costs and impacts for the organization. Early in the process, neither the organization nor the authority will necessarily know who the target of the investigation is, and this will add cost and complexity to requests for documents, interviews and other materials. Organizations may need to conduct their own internal investigations and take legal advice, often at significant cost.
During that process, there also remains a risk that other issues previously unknown will surface. While this is ultimately positive, it can be unhelpful for such matters to surface when there is already significant regulatory attention.
Insider Lists Must Be More Than an Administrative Exercise
Mr. Gerrity was placed on a number of insider lists and received confidentiality warnings. It is important to remember that such controls do not effectively prevent determined wrongdoers. While it is not possible to stop the misconduct in its entirety, organizations should put in place systems such that inclusion on an insider list is accompanied by meaningful engagement, including clear explanations of confidentiality restrictions, duration of the insider status and personal consequences of non-compliance. This may also include the requirement of renewing written acknowledgement for each project for which there is an insider list.
Conflicts of Interest Must Be Actively Managed
Where third parties hold minority shareholding in the service provider contracted by the organization, organizations should proactively ensure that any conflict of interest or risk of conflict of interest is properly identified and actively managed on an ongoing basis.
Surveillance and Escalation Should Include Third Parties
Organizations should consider whether its market abuse surveillance and escalation frameworks adequately capture the risks posed by third parties. While direct monitoring of third-party consultants may be challenging, organizations should have clear escalation routes where concerns arise, including protocols for carrying out internal investigations and making regulatory notifications where appropriate.
Concluding Remarks
Effective compliance under UK MAR requires more than warnings and insider lists. It is key to have active governance, tailored controls and a clear recognition that access to inside information, regardless of whether they are an employee or third party, carries significant regulatory responsibility. Mr. Gerrity's enforcement outcome represents the seriousness with which the FCA treats market abuse offences, and that enforcement action for such offences extends beyond employees and an organization's senior management.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
