George Soros, the hedge fund manager credited with “bringing down the Bank of England,” is at it again, this time in Greece; although it does not seem the scale of the bet was anywhere near as large as Soros’ GBP bet.
Soros and his Quantum Fund are among 20 Hedge Funds who have waged a short war against Greek banks and Hellenic regulators are now fighting back. Quantum Fund, along with other major names such as Toscafund, Everest Capital and Abbeville Partners, have all received fines in the past three months from the Hellenic Republic Capital Market Commission, the Greek version of the U.S. Securities and Exchange Commission.
Greek tragedy: 1 million euro short selling fine remains unpaid by Soros, hedge funds
The fines, totaling nearly 1 million euros, are related to “naked” short selling of stock in various Greek banks, the Financial Times is reporting. The fines have not been paid by the hedge funds, the FT reports, citing sources close to the funds.
The trades in question must have been profitable. Over the past year, for instance, the Piraeus Bank stock price lost nearly 75 percent of its value as has the National National Bank of Greece (ADR) (NYSE:NBG), which is currently trading near all-time lows.
The issue of Greek fines for short selling will be heard before the European Securities Markets Authority, as the Alternative Investment Management Association, a London-based lobby group that is representing the hedge funds, the FT report noted. A spokesperson for the ESMA, however, said a complaint has yet to be formally launched.
According to an April 2015 filing on the Greek regulatory website.
A fine of 65,000 euros to the company Quantum Partners LP because short selling of shares of National Bank of Greece AE without to cover the delivery obligation of openly sold shares clearing system (failed trade), in breach of Article 12 of Regulation 236/2012 of the European Parliament and of the Council of Europe.
Soros, hedge funds say Greek regulator overly strict, regulations not consistent with other EU market regs
The hedge funds are arguing that the Greek regulator has been unduly strict regarding short selling restriction and inconsistent for other market regulation in the EU region.
The moves come as Greece continues to play a game of chicken with European financial leaders as the nation teeters on the brink of exiting the Euro. In this environment the hedge funds have been engaged in the politically controversial method of selling stock the hedge funds don’t own.
The issue has reached a head of late. The Bank of Greek has requested 3 billion euros from the ECB to shore up their balance sheets, and the ECB is currently considering injecting $2 billion as Greek deposits flee in anticipation of capital controls being placed on the Greek population as emergency economic measures could be required if Greece walks away from the EU.
Many hedge funds have been on the long side of the Greek stock trade, as we have noted many times in the past.