Tuesday, 29 July 2014
Last updated 5 hours ago
Mar 1 2010 | 3:37am ET
A Panamanian hedge fund will have to turn over documents—sought by the U.S. Securities and Exchange Commission—to British regulators, a court has ruled.
The London appeals court overturned a August ruling that Amro International did not have to hand over the documents. The SEC had asked the U.K. Financial Services Authority to seek documents, dating back more than a decade, as part of a probe into illegal short-selling by Rhino Advisors, which manages the Amro fund.
Amro, which is not related to the Dutch bank ABN Amro, argued that the SEC’s order was too broad. But the British court said such was not for it to decide.
“It is not for the courts of this country to determine whether the SEC’s request will result in documents being obtained that will be useful for it,” Justice Stanley Burnton wrote.
The SEC four years ago sued Andreas Badian, a former employee of New York-based Rhino, accusing him of manipulating the shares of Sedona Corp. to the benefit of Amro. The U.S. regulator is trying to determine whether or not Badian or his family owns Amro.
According to the SEC, Amro loaned Sedona $2.5 million in exchange for $3 million in convertible bonds. As part of the agreement, Amro was forbidden from shorting Sedona’s stock, as doing so could increase the number of shares the hedge fund could convert.
“It is therefore of the greatest importance that national financial regulators cooperate, particularly where there are suspicions or allegations of financial fraud or other misconduct,” Burnton wrote.
“We are pleased by the decision and heartened that the outcome will enhance the ability of the SEC and U.K. FSA to work cooperatively in pursuing international securities fraud,” Ethiopis Tafara, who heads the SEC’s office of international affairs, told Bloomberg News.
A lawyer for Amro said the hedge fund is considering an appeal.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…