Premier Creditor Fined for Short-Selling Breaches

The UK's Financial Conduct Authority (FCA) said on October 14 it had fined Hong Kong-based Asia Research and Capital Management (ARCM) some £873,000 ($1.13mn) for a lack of transparency over its short position in Premier Oil shares.

"Failure to report disclosable short positions undermines the integrity and efficiency of financial markets," FCA said, noting this was the first time it had imposed a such a penalty for breaching short-selling rules. "ARCM repeatedly breached reporting rules and failed to provide important information to us and to the market. This fine reflects the seriousness of these breaches."

FCA estimates that ARCM failed to make 155 notifications to the FCA and 153 disclosures to the market of its short position in Premier between February 2017 and July 2019. By July last year the hedge fund had built up a short position equal to 16.85% of Premier, but held that stake for a further 106 trading days before notifying the FCA and the market.

ARCM is also Premier's biggest creditor, opposing the company's refinancing plans and its bid to acquire North Sea assets belonging to BP. That deal was shelved after fellow North Sea producer Chrysaor struck a deal earlier this month to buy Premier in a reverse takeover.

The fund agreed to improve its transparency, therefore qualifying for a 30% reduction in the fine, which otherwise would have been £1.25mn.