GLG Partners LP

FCA action

fine

1

in fines

£750k

most recent

August 2006

• Fined £750,000 on 1 August 2006

  The FSA imposed a penalty of £750,000 on GLG Partners LP (GLG) on 1 August 2006. The penalty was levied for committing market abuse and for breach of Principle 5 of the FSA's Principles for Businesses by failing to observe proper standards of market conduct. A summary of the decision is set out below. Full details of the decision can be found in the Final Notice on the FSA's website. The FSA found that between 12 and 14 February 2003 GLG, by its Managing Director who managed the GLG Market Neutral Fund, improperly and in breach of section 118 of FSMA short-sold ordinary shares in Sumitomo Mitsui Financial Group Inc (SMFG) to the value of around $16 million ahead of an announcement of a new issue of convertible preference shares in SFMG though on 11 February 2003 GLG had been wall-crossed and given advance confidential information on the prospective issue by Goldman Sachs International who were pre-marketing the issue. The FSA therefore found that GLG had committed market abuse. The FSA considered that, in committing market abuse, GLG also failed to observe proper standards of market conduct and, as a consequence, was in breach of Principle 5 of the FSA's Principles for Businesses. In deciding that it was appropriate to take action against GLG for behaviour amounting to both market abuse and breach of the FSA's Principles, that the imposition of a financial penalty in this case was appropriate, and that the level of the penalty imposed was proportionate, the FSA had particular regard to the guidance set out in ENF 13.3, 14.4, 14.6 and 14.7, and to the following considerations: (a) The seriousness of the contravention. The FSA regards market abuse as a serious matter; (b) The GLG Market Neutral Fund made a substantial profit as a result of the market abusive behaviour and misconduct in the region of $500,000, of which a part accrued to GLG; and (c) GLG is one of the largest hedge fund managers in Europe. It manages very substantial amounts of money (around $11.5 billion at the relevant time) on behalf of its clients and is an extremely active participant in financial markets, including the LSE. Moreover, it regularly receives restricted information from investment banks (many of whom act as GLG's prime brokers). Maintaining public confidence in the integrity and fair operation of the financial markets is one of the FSA's regulatory objectives.