According to article 9 of the short selling regulation, a natural or legal per-son 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.
Echo Street Capital Management had a net short position of less than the public disclosure threshold of 0.5 %, but above the reporting threshold of 0.2 % in the issued share capital of a publicly traded Danish company. The position went below the reporting threshold in May 2019, and Echo Street Capital Management should thus, at that time, have brought down its position in the Danish FSA’s reporting system accordingly.
Following instructions from the Danish FSA, Echo Street Capital Management promptly corrected this error in January 2020. Echo Street Capital Management was not aware of the error until it was contacted by the Danish FSA. The error has resulted in a misstatement of Echo Street Capital Management’s net short position for more than 200 days.
Echo Street Capital Management has explained that the offence was caused by an inadvertent human error where it was believed that Echo Street Capital Management had made the filing, but did not realize that it had not been processed. Furthermore, Echo Street Capital Management stated that it has now added sufficient control steps to its filing process when submitting short selling notifications in the Danish FSA’s reporting system.
Based on the above-mentioned measures taken by Echo Street Capital Management, the Danish FSA expects that Echo Street Capital Management will not miss any short selling notifications in future.
For more information on short selling, the Danish FSA refers to its website www.dfsa.dk.