Popular channelsQuick advice on...RSS feeds30 second guides...Company searchUseful linksThis is Money deals
About this siteThis is Money is proud to be approved by the Plain English Campaign
THE Financial Services Authority is re-examining whether it needs to clamp down on extreme forms of short-selling after being alerted to a gigantic position taken by one market maker in a single Alternative Investment Market stock.
OTHER STORIES
FTSE LATEST
LATEST ON...
A round-up of the financial crisis
The market maker short-sold stock equivalent to more than the entire market value of the company, the City regulator has discovered.
Gay Huey Evans, director of markets and exchanges at the FSA, said: 'We're looking into a market situation where someone sold an enormous amount of stock.'
She did not name names, but the broker was revealed today as Evolution Beeson Gregory and the company is a cash shell called Room Service Group. Small investors were badly burnt when its shares went into freefall last month. They are now suspended. The London Stock Exchange is also investigating the affair.
The FSA fears such behaviour, effectively a huge 'down bet' on the stock, could create disorder. 'If you're a market maker you don't want to put yourself into disorderly land,' Huey Evans said.
In May, the FSA stopped short of draconian curbs on short-selling, confining itself to ordering settlement company Crest to publish monthly data on stock lending and tell the Stock Exchange to alert markets if it sees a deal which might cause problems.
Huey Evans also revealed a member of the FSA's powerful enforcement unit was looking at whether Chelsea Village shareholders who sold to Russian Roman Abramovich were secretly in cahoots.
LATEST NEWS AND SHARE DATA FOR COMPANIES IN THIS REPORT
Do your own research to find thebest savings accounts
OUR TOP VIDEOS
Do you want to save £200 for nothing?
Yes:
No:
Are you paying too much for your internet?
Enter your post code:
Today our readers are talking about...