Short-sellers sell borrowed securities, hoping to profit by repurchasing them later at a lower price and then returning them to the owner. Budapest-based OTP is Hungary’s largest lender.

The plunge in OTP shares was part of a “significant and strong attack” against Hungarian money and capital markets, Prime Minister Ferenc Gyurcsany said on October 10. The same month, the central bank raised the benchmark interest rate to the European Union’s highest to defend the forint and the country secured an International Monetary Fund-led loan to avert a default as investors sold local assets during the credit crunch.

Soros, chairman and founder of New York-based Soros Fund Management, said in a statement to the MTI news service he was “sincerely sorry” his company made the trade. The Soros fund has launched an internal investigation, is cooperating with Hungarian regulators, and would take the “necessary measures” based on the conclusion of the probe, he added.

“Even if the company’s employee didn’t breach the relevant Hungarian regulation, I am especially pained by what happened because of my close personal relations with Hungary,” Hungarian-born Soros said.

Source: Bloomberg