The U.K.’s Financial Services Authority has enlisted the help of investment banks in a wide-ranging investigation of possible insider trading of convertible bond issues by hedge funds and other investors. Financial News reports that the FSA has been making good use of transaction reports to identify those whose trades may have been the result of inside information. Former GLG Partners top trader Philippe Jabre was slapped with a £750,000 (US$1.4 million) fine on market abuse charges, and the FSA is awaiting the outcome of his appeal before going ahead with investigations of three more HF managers. Despite the pending probe, however, the FSA apparently is now focusing its attention in general on issues dealing with portfolio valuation and disclosure of preferential terms for certain investors, according to FN. The paper also says hedge fund managers appear to be OK with the idea of increasing disclosure on terms, as well as tighter HF rules in advance of the regulator allowing the sale of hedge funds to retail investors. “The FSA has a good grasp of the hedge fund industry,” Andrew Shrimpton, head of the agency’s hedge fund supervisory team, told FN. “We expressed last year the intention to make a modest turn of the dial. We think the dial has been turned up the right amount,” adding, “hedge fund managers think so, too.”
