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Clearstream has agreed to purchase Citco’s hedge fund custody processing unit in Cork for a sum in the ‘mid-double-digit-million euro range’ - The National Bank of Abu Dhabi (NBAD) has become the first licensed market-maker in the United Arab Emirates after winning approval from the Securities and Commodities Authority (SCA) - BlackRock has been awarded its first Renminbi Qualified Foreign Institutional Investor (RQFII) licence by the China Securities Regulatory Commission (CSRC) - An index joint venture between FTSE Group and Canada’s TMX Group has acquired the indices business of MTS, a European electronic fixed income trading business owned by the London Stock Exchange - The European leveraged finance market is set to undergo a shift this year, as private equity sponsors veer back towards loans to finance leveraged buyouts, says S&P Capital IQ - Turkish corporates are the most exposed among EMEA emerging markets to a scenario of slowing growth, rising interest rates and a persistently weak local currency, according to Fitch Ratings - London-based Global Markets Exchange Group (GMEX) is in talks to acquire an equity stake in ALTX Africa Group, a new exchange operator focusing on East Africa - Alternative asset managers with expertise in high-yield fixed income and distressed assets are upping their investments in the peer-to-peer loan market, according to a new report from Cerulli Associates.

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Regulatory Update

Insider Trading, Worldwide

Tuesday, 12 June 2012 Written by 
Insider Trading, WorldwideLast week, regulators in both the U.S. and abroad brought landmark cases for insider trading violations.http://www.ftseglobalmarkets.com/

Last week, regulators in both the U.S. and abroad brought landmark cases for insider trading violations.

In the U.S., Judge Katharine Hayden sentenced former corporate lawyer Matthew Kluger to twelve years in prison—the longest term received to-date for insider trading violations.  While working as a lawyer at prominent law firms (including Cravath, Skadden, and Wilson Sonsini), Kluger misappropriated nonpublic corporate merger information over the course of seventeen years.  Notably, Kluger’s sentence reflecting Kluger’s abuse of his legal position was longer than the eleven years handed to Raj Rajaratnam in the widely publicized Galleon case.

Also last week, in Japan, the Securities and Exchange Surveillance Commission (“SESC”) proposed to fine a U.S. broker dealer $185,000, a penalty much higher than what the SESC has sought in other recent insider trading cases.

Only a few months ago, the U.K. FSA fined a U.S. based hedge fund $11 million for selling shares in a company shortly after receiving indications of a possible stock sale.  This case is a reminder that professionals who obtain information through the exercise of their employment, profession, or duties should be particularly aware of whether they may be exposed to sensitive information along with its potential for liability.

China, too, may also become more active in cracking down on insider trading.  Sources report the Chinese government may broaden the definition of an insider and focus on government officials as well as corporate executives. 

In short, as financial transactions become increasingly globalized, it is clear that portfolio managers, traders, and compliance personnel need to be conversant in the legal and regulatory regimes of multiple jurisdictions.  Requirements surrounding the use of nonpublic information are particularly relevant as acceptable standards of behavior evolve; expect more activity on this front.

Deborah Prutzman

Deborah Prutzman is the founder and CEO of The Regulatory Fundamentals Group (RFG), a New York-based firm that designs and implements business and risk solutions for alternative asset managers and institutional investors. RFG's senior-led team employs a robust suite of tools, including practical alerts on new and potential industry developments and its powerful RFG Pathfinder® knowledge management platform which simplifies the challenges of operating in a regulated environment.  To learn more about The Regulatory Fundamentals Group call (212) 537-4058, email a representative at Information@RegFG.com or visit RegFG.com

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