NEW YORK (MarketWatch) – A group of the world’s biggest hedge funds are planning to sue the U.K.'s Financial Services Authority for millions of British pounds in losses from the regulator’s ban on short-selling, the Sunday Telegraph reported late Saturday, citing unnamed fund managers and lawyers. The FSA announced a ban on the short selling of financial stock Thursday. See full story. The action was followed Friday by a similar move from the U.S. Securities and Exchange Commission. The Telegraph said hedge funds felt the move unfairly impacted on their trading business. “It’s too easy to blame hedge funds,” the newspaper quoted a fund manager as saying. “The real culprits are the banks which were cavalier in their lending, and the investment banks which were irresponsible in the way they packaged the loans and pumped them round the world. It’s also the regulator’s fault for not picking it up, not ours.” Reuters reported, however, that the FSA had not been told of any pending action. “We’re not aware of any legal challenge. We’re clear that the new code provisions are both valid and necessary,” it quoted an FSA spokesperson as saying. Still, the Telegraph cited an attorney for one of the hedge funds as saying the suit would go ahead, as the move could otherwise put many funds out of business. “With one swoop, the regulators have wiped out perfectly legitimate businesses and have cost some funds millions. They have gone for the big political hit without a thought for the damage they are wreaking. There may be unintended consequences but it’s outrageous and illegal,” the lawyer was quoted as saying.
Yeah, I feel real effin’ bad for the hedge fund managers. Guess they’ll be at the soup kitchen soon. Or, worse, they might have their $20 million homes foreclosed on and have to downsize to an impoverished, ignominious $5 million.
kkent Wrote: ------------------------------------------------------- > Yeah, I feel real effin’ bad for the hedge fund > managers. Guess they’ll be at the soup kitchen > soon. Or, worse, they might have their $20 million > homes foreclosed on and have to downsize to an > impoverished, ignominious $5 million. yeah i agree - fcuk em. next thing you know they’ll be regulated
What is this socialism? When hedge funds go under and their employees go jobless…
If hedge funds aren’t good enough to make money without short-selling financials then they deserve to go under. Good freakin’ god! Do you have any idea how many investments are out there? So they can’t flippin’ short financials! Adjust! Evolve! Innovate! Earn your f*cking paychecks, hedge fund managers!
Although of course the FSA didn’t release an RNS regarding the LLOY/HBOS move and they didn’t suspend either stock, instead allowing between 9am (when the BBC released the story) and 2:30pm a completely false market in those stocks to exist. The FSA 1) undertook market manipulation by releasing a story to the press to artificially prop up the price of a stock without releasing an RNS 2) allowed a false market to exist by failing to suspend either stock 3) instituted a short selling ban without consultation or warning Now I understand why they did it and suing them won’t work. But it was still a dirty trick when it was precisely this that they were berating “city spivs” (ie hedge funds) for in the first place. Anything about the size of their houses is just envy and not particularly useful.
hey guys - hegfe funds are only an extension of former IB’s - especially the talent pool. long-short strategies were all done by former IBs. there is a place for long-short strategies (if you care to know there is more to it than just a simple add-subtract game) for price discovery. we’re just going to end up with failry stagnant prices with even more high volatility when information eventually comes through. I think the up-tick rule should be bought back; but banning shorts should go as this is part of price discovery.
"hegfe funds are only an extension of former IB’s " - Huh? Or just No. kkent - hedge funds are usually built around a strategy and there are all kinds of strategies that require short-selling that have nothing to do with bets against the company. For example, convert arb often requires taking a short position in the stock in a really standard issue trade where you buy the convert, short the stock, and deal with credit somehow. Why should the gov’t be stomping this trade?
Merger arb the same thing. Stock for stock deal where one of the 779 is the acquirer, you can’t arb? Ridiculous beyond words.
Exactly - good example. Merger arb is an excellent way of the market pricing the probability of a deal going through. I guess we aren’t allowed to see that now.
Not to mention that using shorting as a way of risk mgt.
kkent Wrote: ------------------------------------------------------- > If hedge funds aren’t good enough to make money > without short-selling financials then they deserve > to go under. Good freakin’ god! Do you have any > idea how many investments are out there? So they > can’t flippin’ short financials! Adjust! Evolve! > Innovate! Earn your f*cking paychecks, hedge fund > managers! I’m just curious how many of my investment opportunities should be regulated out of existence by the government. I will also propose new regulation that any piece of real estate may change hands only once every 15 years, maximum, to discourage speculation in the marketplace. To the real estate professionals out there: Adjust, Evolve, Innovate. These new rules caused havoc in the market. I had trouble getting a borrow on IWM today. IWM! The thing trades 100M shares a day!