FSA Fines Hedge Fund Firm And Manager For Market Abuse

by Robin Pilgrim, LawAndTax-News.com, London

03 August 2006

The UK's Financial Services Authority announced on Monday that it has fined hedge fund manager GLG Partners LP (GLG) and Philippe Jabre, a former managing director of the firm, GBP750,000 each for market abuse and breaching FSA principles. This is the largest fine the FSA has issued against an individual.

On 11 February 2003 Mr Jabre was 'wall crossed' by Goldman Sachs International as part of the pre-marketing of a new issue of convertible preference shares in Sumitomo Mitsui Financial Group Inc (SMFG). He was given confidential information and agreed to be restricted from dealing SMFG securities until the issue was announced.

However, Mr Jabre breached this restriction by short selling around $16 million of SMFG ordinary shares on 12-14 February 2003. When the new issue was announced on 17 February 2003, Mr Jabre made a substantial profit for the GLG Market Neutral Fund.

Margaret Cole, FSA Director of Enforcement explained that:

"Mr Jabre traded on information he had received as a result of the position he enjoyed as a leading hedge fund manager. The stability and fair operation of the markets through legitimate pre-marketing activities is jeopardised if those who are wall-crossed do not respect the restrictions imposed on them."

"GLG is also responsible for Mr Jabre's market abuse. Firms are accountable for the behaviour of their employees, particularly if they are at a senior level."

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