As if GLG Partners didn’t have enough problems with its star trader (or should we now say, former star trader?) Philippe Jabre under assault by both UK and French regulators over alleged insider trading allegations.
Now trades by one of GLG’s other founders are coming under attack as well. French regulators are apparenly looking into trading in two GLG funds, one managed by GLG co-founder Pierre Lagrange, to see if they also might have benefitted by inside information.
French regulators are examining whether two GLG funds — one of which is managed by GLG co-founder Pierre Lagrange — profited from nonpublic information about a convertible-bond deal from French entertainment company Vivendi Universal SA, the people say. Mr. Lagrange last week referred calls to GLG’s press office.
GLG, nestled in the heart of London’s tony Mayfair district, is one of the largest hedge-fund companies in the world. With $11.5 billion under management, it is a big player in European stock and bond markets, enjoying significant market clout because of its size and the huge trading commissions it pays brokerage firms.
The scrutiny of trading in Mr. Lagrange’s fund is significant because of the executive’s senior role at the firm. Mr. Lagrange’s name represents the "L" in GLG and he helped to launch GLG Partners in September 1995.
As part of the probe, French authorities also are looking at whether Mr. Lagrange’s GLG European Long-Short Fund benefited from nonpublic information about a convertible-bond deal from French telecommunications company Alcatel SA, these people say. There is no allegation that Mr. Lagrange himself received nonpublic information about the Alcatel offering, but Mr. Lagrange’s fund made trades in Alcatel shares before the deal was launched and reaped a profit on the trades, say other people familiar with the case. Both the Alcatel and Vivendi offerings took place in 2002.
France’s Autorité des Marchés Financiers isn’t likely to bring charges against Mr. Lagrange because its inquiry has explicitly targeted the hedge-fund groups involved, not individual traders, people familiar with the situation say. The AMF can fine individuals and companies found to have infringed on its rules.
GLG isn’t alone in the investigation. The AMF is examining the activities of five hedge-fund companies, including GLG, which generated a profit totaling about €12 million ($14.2 million) on trades tied to the Alcatel and Vivendi convertible-bond issues, says a person familiar with the situation….
Besides GLG, UBS AG’s O’Connor LLC, Meditor Capital Management, Ferox Capital Management and Marshall Wace Asset Management are being examined by French regulators for trading in Vivendi or Alcatel securities or both. Meditor didn’t respond to a call or email seeking comment. Representatives for the other hedge-fund companies declined to comment….
France Probes A Fund Led By GLG Founder – Wall Street Journal
Wall Street Folly – www.wallstreetfolly.com
Tags: FSA, GLG Partners, Philippe Jabre
