SEC sues London-based hedge fund advisor GLG Partners for illegal short selling

Date: Tuesday, June 26, 2007
Author: Investment Executive Staff

GLG agrees to pay more than US$3.2 million to settle charges.

GLG Partners LP, a hedge fund firm that announced plans to go public yesterday, today agreed to settle with the U.S. Securities and Exchange Commission.

The SEC announced settled enforcement actions against London-based hedge fund adviser GLG Partners for illegal short selling in connection with 14 public offerings. It alleged that during a two-year period, GLG made more than US$2.2 million in illegal profits in four of its managed hedge funds by committing multiple violations of rules designed to prevent manipulative short selling, which 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 US$3.2 million in disgorgement, prejudgment interest, and penalties. The payment includes disgorgement of US$2,214,180 and prejudgment interest of US$489,455.94. GLG also will pay a US$500,000 civil penalty. As part of the settlement, GLG has agreed to adopt and implement policies and procedures focused on compliance with short-selling rules.

In accepting GLG’s settlement offer, the SEC considered remedial acts undertaken by GLG, and GLG’s cooperation in the SEC’s investigation. The firm consented to the order without admitting or denying the SEC’s findings.

“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.