Thursday, 31 July 2014
Last updated 1 hour ago
Dec 10 2010 | 9:33am ET
The Securities and Exchange Commission is not averse to kicking firms while they’re down, and it seemed Gartmore Group could not be any more down.
Until yesterday, anyway, when the U.S. regulator fined the London-based hedge fund for violating its rule against "shorting into the deal," which bars anyone from shorting a stock for five days before participating in a secondary offering of that stock.
Gartmore's AlphaGen RhoCas fund did just that last May, according to the SEC, in a secondary offering of BB&T shares. The regulator levied a $1.35 million fine, including $928,117 in disgorgement.
"Because Gartmore sold short shares of BB&T during the restricted period and then purchased shares in the offering, Gartmore violated Rule 105," the SEC said. "The difference between Gartmore's proceeds from the first 145,000 shares of the short sales and the amount paid for the offering shares was $928,117.83."
An SEC fine may well be the least of Gartmore's troubles. The firm was rocked last month by the surprise resignation of its star hedge fund manager, Roger Guy, and has continued to bleed talent since. The firm put itself up for sale following that announcement, which has triggered widespread redemptions and caused its stock price to plummet.
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…