Swiss Hedge Fund Manager Fined, Banned In U.K.

Sep 28 2012 | 2:32pm ET

A Swiss hedge fund manager has lost his bid to vacate £1.25 million (US$1.93 million) in fines and restitution and a ban from the securities industry.

The U.K.'s Upper Tribunal Tax and Chancery Chamber upheld the Financial Services Authority's levy against Stefan Chaligné and two brokers who worked with him. The regulator accused Chaligné of ordering the brokers, Cheikch Tidiane Diallo and Patrick Sejean, to buy up big blocks of seven stocks at the end of 2007 to drive up their price and his Iviron hedge fund's performance—and performance fees—for the year.

Chaligné did not deny that his purchases had manipulated the market, but argued that it had been inadvertent, and should therefore be subject to a smaller fine and no ban. But the FSA said the abuse was "blatant" and noted that Chaligné specified that the orders were to be placed at the last possible minute.

The Tribunal also ordered Sejean to pay £100,000 more than the FSA originally sought, calling his "one of the rare cases" in which the regulator "was too lenient."

Despite his ban from the U.K. industry and the upholding of the huge fine, Chaligné put on a brave face, asking that his disgorgement be paid to his investors.

"I am pleased that the Tribunal has decided that it was 'not in my contemplation' to cheat my investors," he said in a statement. "The Tribunal also found in my favor that, in the context of the turmoil of the markets in 2007, it was reasonable for me to fear an attack on the stocks held by the fund, which could cause them to reach unfair and inappropriate prices."


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