York Capital Management is under investigation for the allegedly illicit naked short sale of a Spanish bank.
Spanish regulators notified York’s London office that it was looking into its May 2013 short of Bankia in advance of its government bailout. If the Comision Nacional del Mercado de Valores files civil charges against the hedge fund, they’ll be among the first under the European Union’s 2012 short-selling restrictions.
The CNMV is looking into whether York failed to cover its Bankia position “in a timely manner,” as required by those new rules.
York has said that the trades were reviewed by its compliance department and others, and said that circumstances outside of its control were to blame for the late delivery of shares.