Britain’s financial watchdog fines Swiss investment firm GAM and former star manager over bond fund debacle
- FCA has slapped GAM with a fine of £9.1m and Haywood with fine of over £230k
- Final Notices cannot be published due to third party involvement, FCA said
Britain’s financial watchdog has fined Swiss asset management firm GAM International £9.1million for conflicts of interest, and gifts and entertainment matters.
Former star fund manager Timothy Haywood, who was previously head of GAM’s absolute return bond fund unit, was sacked in 2019 for alleged gross misconduct and has now also been fined £230,037 by the Financial Conduct Authority.
GAM and Mr Haywood agreed to resolve all issue of fact and liability, meaning they qualified for a 30 per cent discount.
Fined: Britain’s financial watchdog has fined Swiss asset management firm GAM International £9.1m
Had both parties not agreed to resolve the matter, GAM and Mr Haywood would have been fined £13million and £319,044 respectively, the FCA added in a brief statement.
The FCA said that, in its view, GAM failed to conduct its business with due care, skill and diligence, and it did not ensure that its systems and controls for the prevention of conflicts of interest operated effectively between November 2014 and October 2017.
According to the FCA, between October 2016 and March 2018 GAM also failed to manage conflicts of interest fairly between itself and its customers – in particular, relating to conflicts of interest arising out of three specific investments made by the absolute return unit that Mr Haywood headed up at the time in question.
The debacle centred on Mr Haywood’s purchase of illiquid debt connected to UK-based metals magnate Sanjeev Gupta and Australian financier, Lex Greenhill.
The FCA said it will publish ‘Final Notices’ when it is able and will not be commenting further until then.
But, in its statement, the FCA said: ‘Final Notices would ordinarily be published, providing full details of the FCA’s case.
‘However, another party who is not a subject of the Final Notices may be affected by them. Under the Financial Services & Markets Act, 2000, the FCA is required to consult with that party and provide them with an opportunity to make representations on the references to it before publication is possible.
‘In order not to delay notice of enforcement action, the FCA has instead published warning notice statements outlining the basis of its case against both the firm and individual involved. The links to these statements are Warning Notice Statement 21/5 and Warning Notice Statement 21/6.’
GAM International Management chief executive Peter Sanderson said: ‘We fully accept the findings of the FCA and acknowledge the conflicts of interest shortcomings which occurred at the firm between late 2014 and early 2018.
‘Since then we have significantly strengthened our senior management team, governance, control frameworks, policies and training to ensure that all lessons learned from that period are fully embedded into our firm and culture.
‘Our priority has always been, and remains, protecting the best interests of our clients. I am pleased that, after the ARBF funds were put into liquidation in 2018, we were able to return on average, more than 100 per cent of their value to our clients. With all regulatory matters now concluded, we are looking forward and are focused on our strategy of bringing GAM back to growth.’