Background
According to the short selling regulation Article 9, a natural or legal person who has a short position shall at midnight on the trading day on which the position is achieved calculate the net short position.
If the net short position is 0.2 percent or more of the listed company’s issued share capital, the natural or legal person shall report the position to the relevant competent authority no later than 3:30 pm on the following trading day. For shares admitted to trading on the Danish venues, the Danish FSA is the relevant competent authority. If the net short position is 0.5 percent or more of the listed company’s issued share capital, the Danish FSA will publish the net short position on its website. If the net short position falls below the threshold of 0.2 percent of the listed company’s issued share capital, it should be reported to the Danish FSA.
On 16 August 2018, the Danish FSA contacted Valiant Capital Management, L.P. by e-mail to follow up on certain net short positions that had been active for a very long period according to the Danish FSA’s database.
On 17 August 2018, Valiant Capital Management, L.P. responded to the Danish FSA. Valiant Capital Management, L.P. stated that, in two cases, the net short positions had been reduced below the 0.2 percent reporting threshold, but that Valiant Capital Management, L.P. had not reported the changes to the net short positions to the Danish FSA. In total, Valiant Capital Management, L.P. missed three required notifications of which two should have been filed more than a year ago.
In none of the above-mentioned occasions did the net short position pass the publication threshold of 0.5 percent or more of the listed company’s issued share capital. I.e. none of the net short positions have been published on the Danish FSA’s website.
Valiant Capital Management, L.P. has informed the Danish FSA that the missed filings were due to process failures in Valiant Capital Management, L.P’s internal tracking system such that it did not flag the positions when they fell below the reporting thresholds that required a subsequent filing requirement.
On 21 August 2018, Valiant Capital Management, L.P. reported the missing net short positions to the Danish FSA. Furthermore, Valiant stated that the process failures are still being investigated and that it is now working with its compliance provider to improve the monitoring alerts. Valiant Capital Management, L.P. also stated that because of the Danish FSA’s enquiry, Valiant Capital Management, L.P. has improved its internal processes and communications to ensure that all future notifications are filed in a timely manner.
For more information on short selling, the Danish FSA refers to its website www.finanstilsynet.dk.