Union seeks political short-selling probe
The FSA banned short-selling last week
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Tuesday, 30, Sep 2008 04:00
The GMB union says UK authorities should investigate the link between short-selling and political parties, after a major Tory party donor was linked to short-selling shares in Bradford and Bingley (B&B).
Yesterday's Guardian newspaper said Michael Hintze had given £665,000 to the Tories since David Cameron had become leader and that his company, CQS Management, engaged in short-selling prior of B&B shares.
The practice of short-selling involves benefiting from an expected decline in a listed share price and was temporarily banned by the Financial Services Authority (FSA) last week.
Now GMB general secretary Paul Kenny is calling on UK authorities to launch an inquiry into "market abuses and wrongdoing" in parallel with that already underway in the US.
He wants an investigation into whether there were breaches of rules, market abuses or any other malpractices with the recent shorting of HBOS and Bradford and Bingley shares and whether there are any links between the traders and politicians in the UK.
"In particular GMB would like the FSA to establish what meetings these donors had with Tory politicians and what they discussed at the meetings," Mr Kenny said.
"Did these meetings influence the recent Tory defence of short trading which brought down the Bank of Scotland?"
Mr Kenny said the FSA needed to do more to "clearly delineate" between those markets which have a "proper economic function" and those which "exist to further speculative activity".
"The FSA needs to establish ways of insulating the real economy and proper markets from the activities in these other markets," he added.
A spokesperson for the FSA told politics.co.uk: "The FSA keeps the market under close and constant scrutiny, particularly in these turbulent times and we introduced the new short-selling regulations to prevent market abuse."