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.