Toomre Capital Markets LLC

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FSA investigations continue for GLG Partners Jabre

The Telegraph of London reports on December 8, 2005 in a story entitled Star hedge fund trader fights FSA inquiry" that star hedge fund trader Philippe Jabre is preparing to go on a leave of absence from GLG Partners in order to fight off a regulatory inquiry by the Financial Services Authority. As noted here previously by TCM, for several months Mr. Jabre has been investigated by the City watchdog, and a regulatory source said yesterday he “will now be focusing full time on dealing with his legal issues”.

“Mr Jabre is both a partner and trader at GLG Partners, one of the largest hedge fund groups in Europe, with more than $11billion (£6.3billion) under management. His continuing role at GLG has been a subject of some controversy in the London market since it became apparent that the City's regulator was probing some of his trades. GLG clients have been unsettled and Mr Jabre's fund has suffered from poor performance. Mr Jabre is one of the best-known hedge fund managers in the UK and he is determined to "see out" the FSA probe, friends said. GLG is hoping that Mr Jabre's leave of absence will enable him to clear his name and help the hedge fund group to recover ground lost to competitors since the controversy began.”

“The FSA's inquiry has been looking at whether Mr Jabre, 45, improperly used non-public information on forthcoming convertible issues to deal on behalf of his fund. The FSA has also been probing GLG. The regulator has been looking in detail at three trades in convertible bonds, debt which usually converts into shares at a future date, issued by the French media group Vivendi Universal, the telecoms company Alcatel and the Japanese conglomerate Sumitomo Mitsui Financial Group. In particular Mr Jabre has been facing questioning over the Sumitomo Mitsui Financial trade. It has been alleged he was contacted by Goldman Sachs, the investment bank that advised on the bond, before it was issued. Banks often call investors to "test the water" before setting a price. Contacted traders become "insiders" and are barred from using the information for trading purposes.”