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Bloomberg - Hedge funds met with the U.K.’s Financial Services Authority and the Bank of England in London to discuss the return of their assets from Lehman Brothers Holdings Inc., the Financial Times reported, citing unidentified funds.
Representatives from the Managed Funds Association, which speaks for some of the biggest U.S. hedge funds, met with Lehman’s administrators and the two financial watchdogs on Oct. 22 to speed up the process, the newspaper said.
The funds emphasized the need for more communication from the bank’s U.K. administrators, led by Tony Lomas of PricewaterhouseCoopers LLP, according to the FT.
The administrators said the only creditor meeting will be held on Nov. 14 at London’s O2 complex, the FT said.
Telegraph.co.uk - EU data shows that Philip Falcone, the US hedge fund baron who led the assault on HBOS, has sold short €138m (£108m) of Banco Popular’s shares, or 1.65pc of the total float, through his fund Harbinger Capital.
He has short bets of €208m on Santander and €185m on BBVA. Blue Ridge Capital has targeted Bankinter and Popular. Calypso Capital Management, High Side Capital, Landsdowne, and Belgium’s Fortelus have all joined the hunt.
The Madrid positions are a way for funds to continue shorting banks in Britain, where Santander is now a key player after taking over Abbey National, Alliance & Leicester and Bradford & Bingley.
Britain’s Financial Services Authority has suspended short selling of bank stocks, but Spain has not done so.
The City’s regulator has threatened to impose unlimited fines on investors that breach its new rules on betting against UK bank shares amid a flurry of late disclosures by hedge funds.
The warning came yesterday as Gordon Brown promised new permanent rules to curb short-selling once the Financial Services Authority (FSA) ban expires in January. The Prime Minister said: “We’ll be reviewing over the next four months and I think you will find new rules for the future.”
Such a move could further threaten the hedge funds industry, which has grown explosively in London. The FSA last week introduced measures to tackle short selling of UK bank shares, fearing falling prices would undermine the financial system.
It ruled that any short position greater than 0.25 per cent of a market value of any 34 named financial stocks must be disclosed by 3.30pm on Tuesday this week. A number of other companies have since approached the regulator asking to be included on the list.
Independent - An unprecedented crackdown on speculators preying on falling share prices began on both sides of the Atlantic yesterday, as Gordon Brown promised to "clean up the financial system" after days of turmoil.
The Financial Services Authority (FSA) banned "short selling" of bank shares from midnight last night, after warnings that the practice helped fuel market turmoil that forced the dramatic £12.2bn takeover of HBOS by Lloyds TSB. This came as the New York Attorney announced his office had launched an investigation into illegal manipulation to profit from short selling. The move is to uncover whether speculators have spread misleading information or acted in concert to purposely drive down share prices.
Wealthy hedge fund traders, heavy users of the shorting strategy, have sparked fury after making millions from the collapse in value of UK banking stocks.
The Financial Services Authority (FSA) banned "short selling" of bank shares from midnight last night, after warnings that the practice helped fuel market turmoil that forced the dramatic £12.2bn takeover of HBOS by Lloyds TSB. This came as the New York Attorney announced his office had launched an investigation into illegal manipulation to profit from short selling. The move is to uncover whether speculators have spread misleading information or acted in concert to purposely drive down share prices.
Wealthy hedge fund traders, heavy users of the shorting strategy, have sparked fury after making millions from the collapse in value of UK banking stocks.
Proactive Investors UK - The top thirty gainers for the London Stock Exchange (‘LSE’) read out like a roll call for the British and Irish financial industry, after the Financial Services Authority (‘FSA’) announced late last night that it was imposing a temporary ban on short selling financial stocks. Groups with short positions over 0.25% in the 29 companies included in the ban will have to declare their positions by Tuesday.
Not surprisingly, the FTSE 100 roared to life this morning, climbed a whopping 340 points, or 7.1% to 5225 by 10:30am, the biggest single day gain in more than two decades. The surge higher was lead by financial institutions, which have been offered a temporary reprieve from the usually lucrative tactic by hedge funds to short sectors out of favour with the market. Even large spread betting firms, like CMC Markets, informed private investors this morning that it was not accepting any new short bets on financial stocks, as under normal circumstances, it would hedge those bets, but can no longer do so.
Interactive Investor - Investors are cheering the temporary ban on shorting financial stocks which came into play on Friday morning.
The Financial Services Authority introduced the four-month freeze on profiteering from falling share prices after the markets closed last night in a bid to stem the chaos in the financial sector. The new rules, which cover 29 shares, prevent investors from taking out new short positions or adding to existing ones in all publically listed financial firms.
Investors currently shorting more than 0.25% of a financial company’s shares have until Tuesday to either close their position or declare it to the regulator.
Short-sellers have been blamed for sending share prices in the financial sector plummeting in recent weeks with HBOS the latest victim of speculators looking to make a quick buck from its demise.
Hector Sants, chief executive of the Financial Services Authority, says: "While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets. As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector."
Wealth Bulletin - The UK’s financial regulator has hired Australian Andrew Crain to head up the team that oversees the roughly 40 largest hedge fund managers that operate in the UK. Crain, a former regulator in his home country, assumes his new job later this month.
The team he will run sits within the wholesale investment division of the Financial Services Authority, the UK’s equivalent of the US Securities and Exchange Commission.
The appointment comes as the UK regulator is stepping up efforts to discourage unsavoury behaviour, including insider trading and other market abuses by hedge funds and others.
Those efforts have included measures that are widely unpopular among fund managers, including a rapidly introduced rule requiring disclosure of short positions — or bets that a stock will fall — in certain circumstances.
Independant- Hedge funds may have made more than £1bn from shorting shares in HBOS, whose £4bn rights issue faced intense pressure from investors betting on the share price falling.
Almost 15 per cent, or about 550 million, of the bank’s shares are out on loan, according to Data Explorers. That stock will mainly be lent to funds who have sold the shares expecting to buy them back cheaper.
HBOS’s last closing share price before the cash call was announced was 495.24p, but the shares plunged during the rights issue process. At the closing price of 264.5p yesterday, short funds who bought at the closing price before the cash call was announced on 29 April would have made 230.74p a share, or a total of £1.27bn.
Six funds have announced positions since the Financial Services Authority changed its rules to require the declaration of short holdings over 0.25 per cent for companies undertaking rights issues.
Almost 15 per cent, or about 550 million, of the bank’s shares are out on loan, according to Data Explorers. That stock will mainly be lent to funds who have sold the shares expecting to buy them back cheaper.
HBOS’s last closing share price before the cash call was announced was 495.24p, but the shares plunged during the rights issue process. At the closing price of 264.5p yesterday, short funds who bought at the closing price before the cash call was announced on 29 April would have made 230.74p a share, or a total of £1.27bn.
Six funds have announced positions since the Financial Services Authority changed its rules to require the declaration of short holdings over 0.25 per cent for companies undertaking rights issues.
Independent- The UK’s financial watchdog has targeted hedge funds for the second time this month, demanding more disclosure for those trying to build anonymous stakes in companies using a complex derivative, in a bid to combat market failure.
The move to force disclosure of contracts for difference (CfDs), which comes just weeks after the regulator brought in disclosure rules for short positions in certain circumstances, will leave some hedge funds "fuming", according to one market expert. CfDs and shorting are tactics predominantly used by hedge fund investors.
The Financial Services Authority outlined plans yesterday for investors to disclose their positions if they have built up more than 3 per cent in a company through CfDs. Under the new rules, investors must disclose a position, whether held through shares or CfDs or a combination. Previously there had been no requirement to disclose any CfDs positions other than when the target was in a takeover process.
The move to force disclosure of contracts for difference (CfDs), which comes just weeks after the regulator brought in disclosure rules for short positions in certain circumstances, will leave some hedge funds "fuming", according to one market expert. CfDs and shorting are tactics predominantly used by hedge fund investors.
The Financial Services Authority outlined plans yesterday for investors to disclose their positions if they have built up more than 3 per cent in a company through CfDs. Under the new rules, investors must disclose a position, whether held through shares or CfDs or a combination. Previously there had been no requirement to disclose any CfDs positions other than when the target was in a takeover process.
Financial Times- Several of London’s largest hedge funds are backing Barclays’ £4.5bn ($8.9bn) capital increase, underscoring the complex roles they are playing in the recapitalisation of the UK banking sector.
GLG Partners, Lansdowne, CQS and Och-Ziff have all agreed to take up a large chunk of Barclays shares as part of its £1.7bn placing with institutional shareholders, according to the prospectus issued by the bank on Thursday.
The news comes after hedge funds have been under intense scrutiny for their actions in selling short the shares of banks attempting to raise capital through rights issues. The Financial Services Authority unexpectedly tightened its rules on the disclosure of short-selling in an attempt to stamp out what the regulator believes were attempts by hedge funds to force down banks’ share prices artificially.
Times Online- Proper consultation is the rock upon which good regulation is founded. And for the Financial Services Authority, consultation is in its DNA. So when it does the unthinkable and drops a bombshell without warning or discussion — as last week with the announcement of the Short Selling Instrument — people are bound to be left shellshocked and confused, especially if they are lawyers under pressure from clients to advise on what needs to be done.
Designed, allegedly, to bring greater transparency to the market in the aftermath of the recent rights issues shambles by HBOS and Bradford & Bingley, the measure could have been called the “short notice instrument” because there were mere days between its announcement and its operational effect. The FSA’s justification for the move was that market conditions gave rise to increased potential for market abuse and therefore “immediate measures” were necessary to “maintain market confidence and prevent potential abuse during rights issues”.
Business Spectator- Hedge funds sharply increased their bets against UK lender HBOS in the first days after the Financial Services Authority imposed new rules on June 13, targeting abusive short-selling and smooth the process for firms raising cash from rights issues, reports The Financial Times.
HBOS, Britain’s biggest mortgage lender, which earlier issued its prospectus for a £4 billion rights issue has seen its shares drop below the rights issue price, as hedge funds revealed their positions.
US hedge fund Harbinger Capital said it held a 3.3 percent short position, worth about 345 million pounds, in HBOS, under the new disclosure rules for companies during rights issues.