Former GLG trader mulls options after £750,000 fine

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The Independent Online

Philippe Jabre, the former star trader at the hedge fund GLG, was last night considering whether to appeal against a £750,000 fine for market abuse and violating market conduct.

He has 28 days in which to do so, as does GLG, which was also handed a £750,000 penalty by the Financial Services Authority.

The City watchdog's Regulatory Decisions Committee found Europe's biggest hedge fund manager "vicariously liable" for a failure to monitor properly Mr Jabre.

The fines are the heftiest handed down to any hedge fund and are equal to the biggest slapped on any individual, but Mr Jabre has not been banned or suspended from trading in the UK.

The RDC's decision followed a two-year investigation into whether Mr Jabre traded in the Japanese financial company Sumitomo on inside information properly conveyed to him by John Rustum, who was with Goldman Sachs at the time.

It marks the conclusion of the first major case brought by the FSA against the secretive and sometimes controversial hedge fund industry.

Last year Hector Sants, the FSA's managing director for wholesale and institutional markets, delivered a sharp warning to hedge funds about a crackdown on abuses.

GLG's will be seen within the FSA as a test case and a victory, although it is said that the regulator had wanted a heavier fine.

The publicity-shy, Mayfair-based GLG is more likely to be discomforted by the unwelcome glare of the spotlight than the size of its financial penalty.

Of its £6.6bn of funds under management, some 70 per cent is derived from wealthy individuals including Saudi princes and European industrialists who invest a minimum of $100,000 (£57,100) each.

Mr Jabre, who is understood to have been told of the FSA's decision late on Tuesday, is thought unlikely to return GLG, where he has worked since 1997.

His relationship with two founding partners, Israeli-American Noam Gottesman and Belgian Pierre Lagrange, has become increasingly fractious.

They have told investors not to count on Mr Jabre's return, regardless of the outcome of the FSA's investigation.

Should either GLG or Mr Jabre choose to appeal, the case will be heard in public and from the beginning by the Financial Services and Markets Tribunal.

That is where Paul "The Plumber" Davidson is appealing against his £750,000 for alleged market abuse.