Reprimand to AHL Partners LLP for wrongful reporting of a net short position

The Danish Financial Supervisory Authority (“Danish FSA”) has on 10 July 2019 issued a reprimand to AHL Partners LLP for violation of article 9 of the European Parliament and Council Regulation (EU) No 236/2012 on short selling and certain types of credit default swaps (“the short selling regulation”).

Background

According to article 9 of the short selling regulation, a natural or legal person who has a short position shall at midnight on the trading day on which the position is achieved calculate the net short position. If the net short position requires notification, cf. article 5 and 6 of the short selling regulation, the natural and legal person shall according to article 9 report the position to the relevant competent authority with correct details regarding the identity of the natural or legal person that holds the short position.

If the net short position is 0.2 % or more of the listed company’s issued share capital, the natural or legal person shall report the position to the relevant competent authority no later than 3:30 pm on the following trading day. For shares admitted to trading on Danish trading venues, the Danish FSA is the relevant competent authority. If the net short position is 0.5 % or more of the listed company’s issued share capital, the Danish FSA will publish the net short position on its website. If the net short position falls below the threshold of 0.2 % of the listed company’s issued share capital, it must be reported to the Danish FSA.

AHL Partners LLP (“AHL Partners”) and Numeric Investors LLC (“Numeric Investors”) are both legal entities under the parent company Man Group Investments Limited (“Man Group”). The compliance department at Man Group has been in charge of reporting net short positions on behalf of both AHL Partners and Numeric Investors. Man Group has erroneously reported a net short position on behalf of Numeric Investors which should have been reported on behalf of AHL Partners.

Man Group contacted the Danish FSA on 29 May 2019. Man Group stated that Man Group had identified an internal error which affected the notification history of AHL Partners and Numeric Investors in respect of a net short position in the issued share capital of a Danish listed company.

The error related to a net short position of more than 0.5 % of the issued share capital of the Danish listed company. The error has resulted in AHL Partners neglecting its obligation to notify a net short position for more than one year and having reported a net short position of more than 0.5 % of the issued share capital of the Danish company with an incorrect position holder. The error has thus resulted in the public and the Danish FSA receiving misleading information in relation to the net short positions that require reporting in this particular Danish issuer.

In cooperation, the Danish FSA and AHL Partners have corrected the error in the historical net short positions.

Man Group has informed the Danish FSA that the migration to the automated third party solution and an increased focus on the net short positions of the underlying reporting entities will entail that AHL Partners and the other reporting entities of Man Group will not make incorrect or inadequate short selling notifications in future. Based on the above, the Danish FSA expects that AHL Partners and Man Group will make correct notifications in future.

For more information on short selling, the Danish FSA refers to its website www.finanstilsynet.dk.