Global asset manager GAM International Management has been sanctioned by the U.K.’s Financial Conduct Authority (FCA) for conflict of interest failings.
The FCA fined the firm £9.1 million for failing to adequately manage conflicts of interest involving three transactions, including two transactions that involved failed finance firm Greensill Capital (UK) Ltd.
For instance, according to the regulator, a fund manager who invested over £110 million of clients’ money into Greensill also managed the day-to-day relationship between GAM and Greensill. This created a possible conflict of interest, the regulator said, as the firm “may have been incentivized to financially assist its business partner Greensill rather than necessarily act in the best interests of its customers.”
The FCA found that this and other possible conflicts were not properly identified and managed by the firm.
The regulator also imposed a £230,037 fine on a former investment director at GAM, Timothy Haywood, who allegedly “received gifts and entertainment, including travelling on a Greensill private aircraft,” but failed to report them to his firm.
“Although the FCA did not find evidence that Mr. Haywood made investment decisions because of these gifts and entertainment, the fact that conflicts were not properly managed heightened the risk that he may have been incentivized to invest for personal interest,” the regulator said.
The FCA said that both GAM and Haywood agreed to resolve the cases against them at an early stage, and qualified for a 30% discount on the sanctions against them as a result.
“The FCA expects asset managers and their staff to be scrupulous in identifying and managing conflicts and their risks. This case should send a clear warning to the market,” said Mark Steward, executive director of enforcement and market oversight with the FCA.