The financial watchdog’s enforcement division presented two parallel cases to the regulatory decisions committee at the FSA’s Canary Wharf headquarters. One centred on the actions of the hedge-fund group. The other concentrated on the trades made by its star fund manager Philippe Jabre.
The FSA alleges that Jabre, 45, who ran GLG’s Market Neutral fund until he took a leave of absence on Monday, received details of a $2.9 billion (£1.6 billion) convertible-bond deal before it was issued by Sumitomo Mitsui Financial Group in January 2003. One of the key issues in the case is the identity of the source of the leak.
Sources close to the FSA probe said the committee is moving towards imposing a fine on GLG for weak compliance. But if found guilty, Jabre could face stronger sanctions.
GLG, which is one of Europe’s biggest hedge funds, with $11.5 billion under management, strongly denies market abuse but may admit to weaknesses in its compliance as part of a settlement.
The FSA is working with other international financial regulators to investigate several other deals in which it suspects that GLG benefited in a similar way.
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Jabre is a partner in GLG alongside Noam Gottesman and Pierre Lagrange. Gottesman and Lagrange founded the fund manager with Jonathan Green, who has since left but is understood to have held on to his stake.