Post by soonerlew on Apr 2, 2008 10:58:44 GMT -5
Thanks to jakwilli of millions...........
Revealed: the dirty tricks of rogue traders
By Robert Winnett
Last Updated: 12:58am GMT 22/03/2008Page 1 of 2
A hedge fund based in London set up a "dirty-tricks unit" to manipulate share prices and get illicit information on companies in an attempt to make millions on the stock market, an insider has revealed.
Jeff Randall: Rumour Mill mafia is destroying our savings
Leader: HBOS mugging shows that crime pays
As the official hunt began for the rogue traders who tried to bring down Britain's biggest mortgage lender, HBOS, The Daily Telegraph can reveal a whistle-blower's account of how a multi-billion pound fund allegedly used illegal tactics to drive down stock prices.
Rogue traders allegedly made £100m from the 17 per cent slump in HBOS shares
Private detectives were allegedly employed to hack into executives' emails and telephone records.
Front companies were set up to allow the hedge fund traders to pose as independent researchers or journalists.
Negative information on companies was then distributed to leading investment banks in the hope that rumours would spread and some share prices would fall.
The hedge fund, which cannot be named for legal reasons, stood to make millions from "short-selling" the shares as they fell in value.
The allegations — made in a sworn statement seen by The Daily Telegraph and which has been sent to financial regulators — will add to growing concern over the activities of rogue traders in the City.
The Financial Services Authority, the City regulator, has begun a criminal investigation to find the trader who allegedly made £100 million from the 17 per cent slump in HBOS shares on Wednesday.
The shares fell after "malicious" rumours were spread in the City about the bank, sparking fears that the price had been illegally manipulated — a move described as "the modern day version of bank robbery".
FSA investigators are seeking emails sent to traders that are thought to have prompted widespread selling of HBOS shares. They claimed the bank was experiencing difficulties.
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It has emerged that the rumours are thought to have originated in the Far East, with Singapore named as the most likely source. Nick Leeson, the notorious rogue trader responsible for the collapse of Barings Bank, also operated in Singapore.
Email and Singapore call causes City frenzy
In a separate development, Credit Suisse, the investment bank, admitted that it had uncovered a separate £1.4 billion share-dealing scam by rogue traders — many of whom were based in London — who were trying to protect their bonuses.
The Credit Suisse traders are understood to have sought to cover up their trading losses at the end of last year.
Shadows who move markets | What is short-selling?
London traders sacked in £1.4bn Swiss bank fraud
The revelations follow a week of turmoil in the global markets after the near collapse of the American investment bank Bear Stearns.
Following a meeting with the major banks, it emerged that the Bank of England was considering helping to alleviate the financial crisis by easing the restrictions on banks seeking to borrow money from it.
The accusations about the hedge fund form the most detailed account yet of the illicit activity carried out by the London office of a major international hedge fund. Such tactics are also thought to be used by other hedge funds.
The sworn statement containing the allegations is understood to have been sent to the FSA last year although it is not known what action the regulator took.
The document alleges that:
- Employees of the hedge fund ordered an American-based private detective to hack into the corporate email systems of two firms in which the hedge fund had an interest.
Revealed: the dirty tricks of rogue traders
By Robert Winnett
Last Updated: 12:58am GMT 22/03/2008Page 1 of 2
A hedge fund based in London set up a "dirty-tricks unit" to manipulate share prices and get illicit information on companies in an attempt to make millions on the stock market, an insider has revealed.
Jeff Randall: Rumour Mill mafia is destroying our savings
Leader: HBOS mugging shows that crime pays
As the official hunt began for the rogue traders who tried to bring down Britain's biggest mortgage lender, HBOS, The Daily Telegraph can reveal a whistle-blower's account of how a multi-billion pound fund allegedly used illegal tactics to drive down stock prices.
Rogue traders allegedly made £100m from the 17 per cent slump in HBOS shares
Private detectives were allegedly employed to hack into executives' emails and telephone records.
Front companies were set up to allow the hedge fund traders to pose as independent researchers or journalists.
Negative information on companies was then distributed to leading investment banks in the hope that rumours would spread and some share prices would fall.
The hedge fund, which cannot be named for legal reasons, stood to make millions from "short-selling" the shares as they fell in value.
The allegations — made in a sworn statement seen by The Daily Telegraph and which has been sent to financial regulators — will add to growing concern over the activities of rogue traders in the City.
The Financial Services Authority, the City regulator, has begun a criminal investigation to find the trader who allegedly made £100 million from the 17 per cent slump in HBOS shares on Wednesday.
The shares fell after "malicious" rumours were spread in the City about the bank, sparking fears that the price had been illegally manipulated — a move described as "the modern day version of bank robbery".
FSA investigators are seeking emails sent to traders that are thought to have prompted widespread selling of HBOS shares. They claimed the bank was experiencing difficulties.
advertisement
It has emerged that the rumours are thought to have originated in the Far East, with Singapore named as the most likely source. Nick Leeson, the notorious rogue trader responsible for the collapse of Barings Bank, also operated in Singapore.
Email and Singapore call causes City frenzy
In a separate development, Credit Suisse, the investment bank, admitted that it had uncovered a separate £1.4 billion share-dealing scam by rogue traders — many of whom were based in London — who were trying to protect their bonuses.
The Credit Suisse traders are understood to have sought to cover up their trading losses at the end of last year.
Shadows who move markets | What is short-selling?
London traders sacked in £1.4bn Swiss bank fraud
The revelations follow a week of turmoil in the global markets after the near collapse of the American investment bank Bear Stearns.
Following a meeting with the major banks, it emerged that the Bank of England was considering helping to alleviate the financial crisis by easing the restrictions on banks seeking to borrow money from it.
The accusations about the hedge fund form the most detailed account yet of the illicit activity carried out by the London office of a major international hedge fund. Such tactics are also thought to be used by other hedge funds.
The sworn statement containing the allegations is understood to have been sent to the FSA last year although it is not known what action the regulator took.
The document alleges that:
- Employees of the hedge fund ordered an American-based private detective to hack into the corporate email systems of two firms in which the hedge fund had an interest.