The Upper Tribunal has confirmed the FSA bans and (in two cases) fines on Stefan Chaligné, a Swiss-based hedge fund manager, Patrick Sejean, a former senior salesman on Cantor Fitzgerald Europe’s London-based French desk and Tidiane Diallo, a former junior trader on the same desk, for what the Tribunal described as “as serious a case of market abuse of its kind as one might conceive” (in this case, the limb of the market abuse offence at section 118(5) FSMA 2000). The Tribunal’s decision is here. From the FSA press release:
“Chaligné, a French National who was both the fund manager of, and a shareholder in, the Cayman Islands based “Iviron” hedge fund deliberately manipulated the market in a total of nine securities traded on a number of different European and North American exchanges. He did so by placing orders, through CFE, which were designed to increase the closing price of the securities, and thereby increase the value of the hedge fund, on two key portfolio valuation dates for the fund.
The practice of manipulating share prices on portfolio valuation dates (month and year ends) is known colloquially as “window-dressing the close”. Having manipulated the price of eight securities on 31 December 2007, Chaligné then also manipulated the price of two securities on 31 January 2008.
The increases in the valuation of the fund enabled Chaligné to present a positive view of the performance of the fund, at a time of difficult market conditions, to current and prospective investors, and thereby present himself as a competent fund manager. The practical effect of his market abuse was to increase the performance and management fees paid to him by the beneficiaries of the hedge fund.
Sejean and Diallo effected and executed Chaligné’s orders for the purpose of achieving Chaligné’s objective. Diallo was involved on one of the dates. Sejean was involved on both dates and deliberately influenced and involved more junior members of staff, including Diallo, in the misconduct. They both understood the manipulative nature of the orders.”
More market abuse here.
Follow us on Twitter @CoFinLaw
Company and Financial Law 