Man Financial Gets CFTC Scrutiny

Regulators are considering a civil suit over alleged trading irregularities.
Publish date:

U.S. regulators are considering a civil suit against

Man Group's

U.S. unit, according to a regulatory filing.

The U.K. hedge fund said in a May 31 filing that the unit, Man Financial, and two employees got so-called Wells Notices from the Commodity Futures Trading Commission's division of enforcement. Wells Notices give recipients an opportunity to respond to regulatory complaints before they are filed.

Man says the CFTC alleges it falsified the dates of certain trades. The comment came in the same filing in which the hedge fund revealed its plans to take two portions of its business public.

The U.K. hedge fund is planning an IPO of its offering brokerage arm, MF Global, in the third quarter of 2007 on the

New York Stock Exchange

. It also wants to publicly offer shares in a long/short investment vehicle to be based in Chicago known as Man Dual Absolute Return Fund.

The Wells Notice relates to two trades that Man Financial executed in 2004 for one customer. The CFTC claims that Man Financial falsified the dates on which the trades occurred, according to the filing. The trades were reported to the

New York Mercantile Exchange


, it said.

The CFTC's division of enforcement is considering that a civil proceeding be commenced against Man Financial and the two employees for violating the Commodity Exchange Act.

"We and the individuals strongly dispute the contentions of the division of enforcement staff and have submitted a written statement to the division of enforcement, setting forth the reasons why we believe no proceeding should be brought," Man Financial said in the filing.

A Man spokesman declined to comment beyond the filing. A CFTC spokesman did not immediately return a phone call.