Gartmore fined $1.35m for breaching SEC rules

Gartmore has been censured and fined $1.35m by the SEC for breaking its short-selling rules.

The asset manager was yesterday ordered to pay a civil money penalty of $375,000, disgorgement of $928,117 and prejudgement interest of $44,134, a fine totaling $1.347m.

It must be paid within 14 days or additional interest will accrue, the SEC said.

The judgement follows a breach of the regulations by Gartmore on behalf of its AlphaGen RhoCas fund in May 2009.

According to the SEC, Gartmore broke the rule in relation to short selling online banking giant BB&T.

"Between May 6 and May 12, 2009, Gartmore sold short a total of 172,405 shares of common stock of BB&T for RhoCas at prices ranging between $25.22 and $27.38 per share," the SEC report reads.

"On May 11, 2009, following the close of the market, BB&T announced a public secondary offering of common stock, which was priced on May 12, 2009.

"On May 12, 2009, Gartmore purchased a total of 145,000 shares of BB&T common stock in the Offering for RhoCas at $20.00 per share. Gartmore covered a portion of its short position in BB&T stock with shares bought in the Offering.

"Because Gartmore sold short shares of BB&T during the restricted period and then purchased shares in the Offering, Gartmore violated Rule 105. The difference between Gartmore's proceeds from the first 145,000 shares of short sales and the amount paid for the offering shares was $928,117.83."

Gartmore launched the AlphaGen Rhocas, a financials hedge fund, in 2004.