City watchdog demands life ban for star hedge fund trader Jabre

The Financial Services Authority called again yesterday for Philippe Jabre, the former star GLG Partners trader fined £750,000 in February for alleged market abuse, to be banned from trading in the City.

Mr Jabre, who has since parted company with GLG, one of London's leading hedge fund managers, is appealing to the Financial Services and Markets Tribunal to challenge his fine, the regulator's jurisdiction and its right to call again for a ban.

The fine, which equalled the heaviest ever handed down to an individual by the FSA, related to Mr Jabre's trading in the Japanese company Sumitomo Mitsui Financial Group three years ago.

He took a series of positions in the shares shortly after allegedly being made privy to inside information about Sumitomo by a salesman at Goldman Sachs, the investment bank.

At a second preliminary appeal hearing yesterday, Mr Jabre's lawyer submitted that because the trades took place on the Tokyo, rather than London, stock exchange, the FSA had no powers to punish his client.

In its submission, the FSA called on the three-man tribunal, led by Stephen Oliver QC, to conclude "that Mr Jabre is not a fit and proper person to perform functions in relation to a regulated activity".

GLG, which was also fined £750,000 over the matter, chose not to appeal against the FSA's decision.

Yesterday's hearing centred on the potential penalties that Mr Jabre could face, not his guilt or innocence. Charles Flint QC, acting for Mr Jabre, said the tribunal does not have the power to ban his client and the appeal concerns a challenge to the trader's fine. He said the FSA had pushed to fine Mr Jabre £1m but had been reined in by its Regulatory Decisions Committee, which sets its fines.

The tribunal's decision on yesterday's submission is not expected for some weeks. Both sides will then take several more weeks to digest that decision before a date is set for the full hearing.

Meanwhile, Mr Jabre has set up a new hedge fund to manage his sizeable personal wealth, estimated to be about £200m.

Last month, the FSA's chief disciplinarian, Tim Herrington, issued a stark warning to financial fraudsters and rule breakers that he would not be afraid to "remove the livelihoods" of anyone who threatened the stability of financial markets.

His warning came just a month after the FSA was embarrassed by the tribunal's decision to overturn the regulator's £750,000 fine handed down to Paul "The Plumber" Davidson.

Mr Davidson and Ashley Tatum, his dealer at City Index, were both cleared of market abuse by the panel.

At that time, lawyers warned that the FSA could be hit with substantial claims for damages from both men.