Press Release: SEC Sues London-Based Hedge Fund Adviser GLG Partners, L.P. for Illegal Short Selling in Connection with Public Offerings (Press Release No. 2007-122; June 26, 2007)
GLG Partners, L.P., a London-based hedge fund adviser, illegally short-sold securities in 14 U.S. public offerings between 2003 and 2005, generating $2.2 million in illicit profits, and settled with the SEC by paying over $3.2 million in disgorgement, interest, and penalties without admitting or denying wrongdoing.
GLG Partners, L.P. violated Rule 105 of Regulation M on 16 occasions across four hedge funds between July 2003 and May 2005 by short-selling securities and then covering those positions with shares obtained in 14 U.S. public offerings, resulting in $2,214,180 in illegal profits. The SEC ordered GLG to pay $2,214,180 in disgorgement, $489,455.94 in prejudgment interest, and a $500,000 civil penalty, totaling over $3.2 million, while also requiring it to implement compliance policies, train employees, and appoint a senior officer to oversee Rule 105 adherence. GLG consented to the settlement without admitting or denying the findings, and the SEC credited its cooperation and remedial actions, acknowledging assistance from the UK’s Financial Services Authority.
GLG Partners, L.P., a London-based hedge fund adviser, engaged in illegal short selling in violation of Rule 105 of Regulation M during 16 separate instances across 14 U.S. public offerings between July 2003 and May 2005, using securities acquired in those offerings to cover short positions in its GLG Market Neutral Fund, GLG North American Opportunity Fund, GLG Technology Fund, and GLG European Long Short Fund. This conduct generated $2,214,180 in illicit profits, which the SEC sought to recover through disgorgement, along with $489,455.94 in prejudgment interest and a $500,000 civil penalty, totaling more than $3.2 million in settlement payments. The SEC found that GLG had no policies, procedures, or training in place to ensure compliance with Rule 105, which directly contributed to the repeated violations. Without admitting or denying the allegations, GLG consented to a cease-and-desist order and agreed to implement comprehensive compliance measures, including employee training and the designation of a senior officer to oversee Rule 105 adherence. The SEC acknowledged GLG’s cooperation during the investigation and its remedial actions as mitigating factors in accepting the settlement. The Financial Services Authority in the United Kingdom provided assistance in the SEC’s inquiry, highlighting the cross-border nature of the enforcement action. This case underscored the SEC’s stance that foreign-based firms trading in U.S. markets must comply with U.S. securities laws, regardless of their location.
Extracted insights
- $3.20M $3.2 Million $1M–$10M
- $3.20M $3.2 million $1M–$10M
- $2.21M $2,214,180 $1M–$10M
- $2.20M $2.2 million $1M–$10M
- $500K $500,000 $100K–$1M
- $489K $489,455 $100K–$1M
- person antonia chion
- agency associate director of sec's division of enforcement
- agency director of sec's division of enforcement
- company glg partners, l.p.
- person linda chatman thomsen
- agency Securities and Exchange Commission
- SEC sued GLG Partners, L.P. for illegal short selling in connection with public offerings
- GLG Partners, L.P. agreed to pay $3.2 million
- GLG Partners, L.P. made illegal profits of $2.2 million
- GLG Partners, L.P. violated Rule 105 of Regulation M on 16 occasions in 14 public offerings
- GLG Partners, L.P. agreed to cease-and-desist order
- GLG Partners, L.P. paid disgorgement of $2,214,180
- GLG Partners, L.P. paid prejudgment interest of $489,455.94
- GLG Partners, L.P. paid civil penalty of $500,000
- GLG Partners, L.P. violated Rule 105 from July 2003 through May 2005
- Linda Chatman Thomsen is Director of SEC's Division of Enforcement
- Antonia Chion is Associate Director of SEC's Division of Enforcement
- GLG Partners, L.P. managed GLG Market Neutral Fund; GLG North American Opportunity Fund; GLG Technology Fund; GLG European Long Short Fund
SEC Sues London-Based Hedge Fund Adviser GLG Partners, L.P. for Illegal Short Selling in Connection with Public Offerings FOR IMMEDIATE RELEASE 2007-122 GLG Agrees to Pay More Than $3.2 Million to Settle Charges Washington, D.C., June 26, 2007 — The Securities and Exchange Commission today announced settled enforcement actions against London-based hedge fund adviser GLG Partners, L.P. for illegal short selling in connection with 14 public offerings. During a two-year period, GLG made more than $2.2 million in illegal profits in four of its managed hedge funds by committing multiple violations of Rule 105 of Regulation M of the Securities Exchange Act of 1934. Rule 105, designed to prevent manipulative short selling, prohibits covering certain short sales with securities obtained in a public offering. GLG agreed to a cease-and-desist order and payment of more than $3.2 million in disgorgement, prejudgment interest, and penalties. In accepting GLG’s settlement offer, the SEC considered remedial acts undertaken by GLG, and GLG’s cooperation in the SEC’s investigation. “With this action against GLG, the SEC reaffirms its commitment to protecting investors by upholding the integrity of the public offering process,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. Antonia Chion, Associate Director of the SEC’s Division of Enforcement, stated, “Foreign-based hedge funds that trade on the U.S. markets cannot turn a blind eye to compliance with the U.S. federal securities laws.” Without admitting or denying the findings, GLG consented to the SEC order that finds, from July 2003 through May 2005, GLG violated Rule 105 on 16 occasions in 14 different public offerings in the following funds: GLG Market Neutral Fund; GLG North American Opportunity Fund; GLG Technology Fund; and GLG European Long Short Fund. At the time, GLG did not have any policies, procedures or training on Rule 105. GLG’s payment includes disgorgement of $2,214,180 and prejudgment interest of $489,455.94. GLG also will pay a $500,000 civil penalty. As part of the settlement, GLG has agreed to adopt and implement policies and procedures focused on compliance with Rule 105; provide training on Rule 105 to employees, including compliance and legal personnel; and designate a senior-level employee as responsible for overseeing GLG’s compliance with Rule 105. The SEC thanks the Financial Services Authority in the United Kingdom for its assistance in this matter. # # # For further information contact: Antonia Chion Associate Director Division of Enforcement (202) 551-4842 Kara Brockmeyer Assistant Director Division of Enforcement (202) 551-4767 Additional materials: Litigation Release No. 20167 and Complaint Administrative Proceeding Release No. 34-55956 http://www.sec.gov/news/press/2007/2007-122.htm Home | Previous Page Modified: 06/26/2007
SEC Sues London-Based Hedge Fund Adviser GLG Partners, L.P. for Illegal Short Selling in Connection with Public Offerings FOR IMMEDIATE RELEASE 2007-122 GLG Agrees to Pay More Than $3.2 Million to Settle Charges Washington, D.C., June 26, 2007 — The Securities and Exchange Commission today announced settled enforcement actions against London-based hedge fund adviser GLG Partners, L.P. for illegal short selling in connection with 14 public offerings. During a two-year period, GLG made more than $2.2 million in illegal profits in four of its managed hedge funds by committing multiple violations of Rule 105 of Regulation M of the Securities Exchange Act of 1934. Rule 105, designed to prevent manipulative short selling, prohibits covering certain short sales with securities obtained in a public offering. GLG agreed to a cease-and-desist order and payment of more than $3.2 million in disgorgement, prejudgment interest, and penalties. In accepting GLG’s settlement offer, the SEC considered remedial acts undertaken by GLG, and GLG’s cooperation in the SEC’s investigation. “With this action against GLG, the SEC reaffirms its commitment to protecting investors by upholding the integrity of the public offering process,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. Antonia Chion, Associate Director of the SEC’s Division of Enforcement, stated, “Foreign-based hedge funds that trade on the U.S. markets cannot turn a blind eye to compliance with the U.S. federal securities laws.” Without admitting or denying the findings, GLG consented to the SEC order that finds, from July 2003 through May 2005, GLG violated Rule 105 on 16 occasions in 14 different public offerings in the following funds: GLG Market Neutral Fund; GLG North American Opportunity Fund; GLG Technology Fund; and GLG European Long Short Fund. At the time, GLG did not have any policies, procedures or training on Rule 105. GLG’s payment includes disgorgement of $2,214,180 and prejudgment interest of $489,455.94. GLG also will pay a $500,000 civil penalty. As part of the settlement, GLG has agreed to adopt and implement policies and procedures focused on compliance with Rule 105; provide training on Rule 105 to employees, including compliance and legal personnel; and designate a senior-level employee as responsible for overseeing GLG’s compliance with Rule 105. The SEC thanks the Financial Services Authority in the United Kingdom for its assistance in this matter. # # # For further information contact: Antonia Chion Associate Director Division of Enforcement (202) 551-4842 Kara Brockmeyer Assistant Director Division of Enforcement (202) 551-4767 Additional materials: Litigation Release No. 20167 and Complaint Administrative Proceeding Release No. 34-55956 http://www.sec.gov/news/press/2007/2007-122.htm Home | Previous Page Modified: 06/26/2007