While many view as a slap on the wrist a pair of £750,000 (US$1.3 million) fines against GLG Partners and trader Philippe Jabre, it may actually be cause for hand-wringing among hedge funds. The fines imposed by the U.K.'s Financial Services Authority, is mere pocket change for a firm like GLG, with £6.6 billion (US$11.6 billion) AUM, but they are also the largest such penalties inflicted on a hedge fund and a hedge fund manager, the Financial Times reports. And while Jabre is basically back in business, the FSA has made clear that it means business, even if industry watchers felt the penalties should have been harsher. Observers agree that the message to hedge funds is to get their act together – the FT says some firms are already tightening controls, as GLG was found “vicariously liable” for not properly monitoring Jabre – and that harm to GLG is goes beyond the loss of relatively few pounds.
“GLG will have spent far more than £750,000 on their defense,” one lawyer told the newspaper. “This is not the type of thing that pension funds trustees like to see.”
The big winner in this case, says the FT, is the FSA’s newly reconstituted Regulatory Decisions Committee, which didn’t rubber stamp all of the parent agency’s charges, and in effect declared its independence by toning down the penalties.