FSA fines GLG Partners and Philippe Jabre 750,000 GBP each for market abuse
1st August 2006The Financial Services Authority has today fined hedge fund manager GLG Partners LP (GLG) and Mr Philippe Jabre, a former managing director of the firm, 750,000 GBP 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). Mr Jabre was given confidential information and agreed to be restricted from dealing SMFG securities until the issue was announced. 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 said:
"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."
Decision of the Financial Services and Markets Tribunal
The FSA has issued the Final Notice to GLG and Mr Jabre after the withdrawal of Mr Jabre's reference to the Financial Services and Markets Tribunal following the Tribunal's decisions on 27 July 2006. The Tribunal ruled on two important issues raised by Mr Jabre's reference; the extent of the Tribunal's jurisdiction and the scope of the market abuse regime.
Margaret Cole said:
"These decisions provide clarification on two points of general importance to our work. The Tribunal has made it clear that it can impose a different or greater sanction than that imposed by the RDC. And the Tribunal has confirmed that it is not possible for someone with inside information on a UK traded stock to circumvent the market abuse regime by trading in that stock on an overseas market."
