Short Selling Rumors Send U.K. Bank Stocks Tumbling

Mar 19 2008 | 11:03am ET

Rumors of hedge funds shorting the stock of the U.K. largest mortgage bank sent the financial company’s shares down sharply on Wednesday.  Shares of The Halifax fell 20% amidst the rumors, which were accompanied claims that the bank had to seek emergency funding from the Bank of England.

The Bank of England and the Financial Services Authority quickly issued statements denying the rumors. The FSA also announced that it has launched an investigation into the trading activity surrounding The Halifax—which is owned by the U.K. largest bank HBOS—and other banks and went further, accusing traders of “market abuse by spreading false rumors to profit from short-selling.”

The mortgage bank recovered most of its losses following the announcements from regulators.

HBOS has a sizable mortgage book, though unlike Northern Rock, it has a large depositor base and a solid balance sheet.

The Royal Bank of Scotland was also affected by the hedge fund short-selling rumors.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

The healthcare sector went on a tear beginning in 2011, thanks in large part to the passage of the Affordable Care Act and its impending implementat