Hong Kong Regulator Reprimands StanChart Over Fund Pricing
06.01.09, 13:54 Uhr
HONG KONG -(Dow Jones)- Securities regulators reprimanded the Hong Kong unit of Standard Chartered PLC (STAN.LN) for allegedly giving a hedge fund timing advantage on mutual fund investments.
Standard Chartered (Hong Kong) Ltd. didn't concede any wrongdoing, but said Tuesday it would settle the case by paying out US$320,000 to clients who could have been impacted by the timing advantage given to Stone Castle Ltd. The amount will be divided among more than 1,000 investors, with some getting just 10 U.S. cents plus interest.
The Securities and Futures Commission said in a statement that Standard Chartered gave preferential treatment to Stone Castle, an investment vehicle owned by U.S. hedge fund Millennium Partners L.P.
Standard Chartered gave Stone Castle same-day pricing as it switched in and out of 24 mutual funds, hosted by ACM Funds and Scudder Global Opportunities Funds, while other clients got next-day pricing.
"The SFC considers that the timing advantage given to Stone Castle was open to abuse and was potentially prejudicial to Standard Chartered Bank's other clients because it might enable Stone Castle to trade ahead of those clients at better prices," the SFC said.
The SFC statement didn't specify the profit Stone Castle could have made due to the timing advantage.
The SFC said its formal rebuke of Standard Chartered followed an investigation by the Hong Kong Monetary Authority into the bank's mutual funds distribution and dealing operations between May 2001 and September 2003. The case was referred to the SFC in January 2008.
Stone Castle couldn't be immediately reached for comment.
The Securities and Futures Commission said in a statement that Standard Chartered gave preferential treatment to Stone Castle, an investment vehicle owned by U.S. hedge fund Millennium Partners L.P.
Standard Chartered gave Stone Castle same-day pricing as it switched in and out of 24 mutual funds, hosted by ACM Funds and Scudder Global Opportunities Funds, while other clients got next-day pricing.
"The SFC considers that the timing advantage given to Stone Castle was open to abuse and was potentially prejudicial to Standard Chartered Bank's other clients because it might enable Stone Castle to trade ahead of those clients at better prices," the SFC said.
The SFC statement didn't specify the profit Stone Castle could have made due to the timing advantage.
The SFC said its formal rebuke of Standard Chartered followed an investigation by the Hong Kong Monetary Authority into the bank's mutual funds distribution and dealing operations between May 2001 and September 2003. The case was referred to the SFC in January 2008.
Stone Castle couldn't be immediately reached for comment.
DJG/dok
