Former Syd fund manager banned for naked short selling

·1-min read
Joel Carrett/AAP PHOTOS

The securities regulator has banned a former Sydney fund manager from providing financial services for three years after he engaged in a prohibited securities manoeuvre on over 150 occasions in 2021.

The Australian Securities and Investments Commission said on Monday that former Gleneagle Securities fund manager Gregory Tolpigin engaged in the naked short selling of over $7 million in shares from January to August of 2021.

Naked short selling is the practice of short selling a security - betting that its price will fall - without first owning or borrowing those shares.

It risks settlement failure in the event that one is unable to buy those shares prior to settlement, such as if the shares have entered a trading halt.

The practice is banned in many countries, including Australia.

ASIC called naked short selling an abusive practice that distorts financial markets, but said it recognises covered short selling could be a legitimate mechanism for price discovery.

In covered short selling, the shares are first borrowed and then sold, so there is no risk of settlement failure.

ASIC also banned Mr Tolpigin from controlling a financial services business or acting as an officer.

ASIC described Mr Tolpigin as a "former" securities manager for Gleneagle Securities, but the firm's website on Monday still listed him as their head of proprietary trading.

It also noted he had previously worked for Citigroup, Bankers Trust and Macquarie Bank as well as appeared on television and written for a number of Australian financial publications.

Gleneagle Securities has been contacted for comment.