Hannam has appealed against the FSA order to the Upper Tribunal (the Tribunal) where he and the FSA will each present their case.
FSA said that Hannam revealed inside information in two emails sent in September and October 2008 to a potential client.
The US regulator argues that the emails had secret information pertaining to Heritage Oil Plc (Heritage), an existing J P Morgan client for which Hannam was the lead adviser.
The FSA accepts that Hannam did not set out to commit market abuse but considers that Hannam’s failings were serious in view of his experience and senior position within J P Morgan.
The FSA thinks that the size of the proposed fine reflects the seriousness of the market abuse and should act as a deterrent to other market participants.
FSA director of enforcement and financial crime Tracey McDermott said that inside information is extremely valuable and must be handled with care to ensure that it is properly controlled and that appropriate safeguards are observed.
