Deutsche Bank has been privately scolded by the Financial Services Authority for advising clients to short rights issues at Britain's embattled banks to cash in on a collapse in their shares, The Telegraph reports.
The note to clients from its equity trading desk is understood to have infuriated the regulator and been one of the catalysts for its sudden clampdown last week on short-selling during rights issues, on which it provided more detail yesterday. Deutsche drew up the client advice shortly after Royal Bank of Scotland and HBOS launched their respective £12bn and £4bn rights issues in April. In the document, it recommends "buying the rights and shorting the stock, hoping the stock trades through the rights price". Buying the rights "would provide a hedge to losses from the short". THE ROYA...
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