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GLG Appeal Denied in Vivendi Case
by Christopher Glynn ,Senior Reporter, March 5, 2009

GLG lost an appeal against a fine for insider trading said to have occurred in a 2002 convertible bond offering from media conglomerate Vivendi.

The London company must fork over $1.9 million for the improper transaction, a court in France, where Vivendi is headquartered, ruled.

GLG, along with Ferox Capital, Meditor Capital and the hedge fund unit of UBS, each stood accused of insider trading in the convertible bond sale.

According to the charge, GLG sold off its stake in Vivendi after learning from Deutsche Bank that Vivendi was planning the offering. In a run up to a bond offering, an investment bank will often solicit opinion about what interest a sale would garner. Trading stock based on that information is prohibited.

A convertible bond sale can lower the stock price of a company, so an investor with inside knowledge of an impending deal can sell company stock at a higher price before the offering is announced.

GLG has a record of legal trouble in France. Its onetime star trader Philipe Jabre was fined for insider trading there in 2007.

GLG is refurbishing itself into a full-on asset manager.

  
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2 Comments
Post a comment.
POSTED BY Christopher Glynn at 3/5/2009 1:58:57 PM
The GLG story is an old one and already very much contested at the time. People were saying that, already at the time, both the London and the Paris authorities wanted to give an example to the hedge fund industry on alleged inside trading. In London for the "star system" and the notoriety of GLG and in Paris for the amounts of money involved which the French always have problems to deal with. Considering the reputation that the Hedge Fund industry acquired as the Devils of the Financial World, it is not surprised that they have lost the appeal. The Philippe Jabre's trouble is related to the same Vivendi case and, not as suggested, to another one.
POSTED BY carlos gravato at 3/6/2009 4:36:16 AM
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