Moore Capital Raided By FSA in the UK ~ market folly

Tuesday, March 23, 2010

Moore Capital Raided By FSA in the UK

One of the biggest stories today has been the fact that Louis Bacon's hedge fund firm Moore Capital was raided earlier by the Financial Services Authority (FSA) in the United Kingdom. An employee at Moore Capital has been arrested, but no one has been charged. Robert Peston over at BBC has noted that, "Moore Capital's understanding is that the FSA is probing private dealings by the trader, rather than trades for the firm." According to Bloomberg, Moore's equity execution trader Julian Rifat was the individual searched. Apparently, an individual at Deutsche Bank and an individual at the London office of BNP Paribas are also under investigation.

According to the FSA press release, "It is believed that the city professionals passed inside information to traders (either directly or via middlemen) who traded based on this information and have made significant profits as a result." Apparently the joint investigation began back in late 2007. Their release calls this the first operation where 16 addresses were searched today.

So for now, it appears as though the individuals are under investigation for their own private transactions and that the firms themselves are not under investigation. It will certainly be interesting to watch as it unfolds. Moore Capital's name has now been tossed into the negative spotlight with all of these headlines though. Remember that last year another high profile hedgie, Raj Rajaratnam's Galleon Group was also accused of insider trading last year.

Moore Capital's founder Louis Bacon is of course one of the most prominent global macro managers out there and was recently featured on Forbes' billionaire list. For more on Bacon's hedge fund, we've posted up some recent portfolio activity out of Moore, as well as some of their UK positions. We'll continue to follow developments in this new insider trading case.

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