July 11, 2006

FSA Seeks Ban on Hedge Fund Ex-Director

The Financial Services Authority (FSA) is still gunning for Philippe Jabre. The former director of the GLG Partners LP hedge fund is under investigation for alleged insider trading, and has already been fined 750,000 pounds by the UK markets regulator on account of this misdemeanor.

The FSA is not satisfied though; it is baying for Jabre’s blood by asking the Financial Services & Markets Tribunal that is trying the case to ban the perpetrator from trading on the country’s financial markets.

The regulator has accused Jabre of using information gleaned from a salesman at the Goldman Sachs Group to trade on a sale of Sumitomo Mitsui Financial Group Plc securities. While Jabre asserts that he misunderstood the salesman’s information, his fund GLG Partners has been fined for its part in the deal. However, Goldman Sachs has got off scot-free.

Jabre and his lawyer, Charles Flint, are contesting the FSA’s demand besides refusing to pay the fine. Flint maintains that the tribunal does not have the power to ban Jabre, and that the FSA does not have the jurisdiction to prosecute him as the shares were traded in Tokyo, not London. The last argument, if it holds water, will open up a Pandora’s box with traders using inside information on companies that are listed in London being legally allowed to trade on the New York Stock Exchange (NYSE), which has secondary listings of nearly 40 companies that are listed on the London Exchange.

Flint also states that the Regulatory Decisions Committee, a board of the FSA that decides penalties, has already overturned an FSA appeal to impose a fine of 1 million pounds on Jabre and ban him from the markets.

Jabre is one of the UK’s richest individuals with assets valued at over 200 million pounds to his name.

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