FSA closes GLG insider trading case

Jabre last week withdrew his appeal against the record fine for market abuse against an individual. His lawyers had questioned if the FSA’s Financial Services and Markets Tribunal had jurisdiction in Japan, where the trades took place.

Jabre was 'wall crossed' by Goldman Sachs International as part of the pre-marketing of a new issue of convertible preference shares in Sumitomo Mitsui Financial Group (SMFG) in February 2003.

The FSA said he was given confidential information and agreed to be restricted from dealing SMFG securities until the issue was announced. However, Jabre breached this restriction by short-selling around $16 million of SMFG ordinary shares in Tokyo, the FSA said. When the new issue was announced, Jabre made a substantial profit for the GLG Market Neutral Fund (see: FSA slaps £750,000 fine on GLG and its former trader).

“Jabre traded on information he had received as a result of the position he enjoyed as a leading hedge fund manager," said Margaret Cole, director of enforcement at the FSA. "The stability and fair operation of the markets through legitimate pre-marketing activities is jeopardised if those who are wall-crossed do not respect the restrictions imposed on them. GLG is also responsible for Jabre's market abuse. Firms are accountable for the behaviour of their employees, particularly if they are at a senior level.”