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Alternative Market Briefing

Martin Currie shuts down China Hedge Fund after being hit with $14m fine

Wednesday, December 12, 2012

From Komfie Manalo, Opalesque Asia – International equity specialists Martin Currie is closing down its long/short equity strategy China Hedge Fund after the firm was slapped with a $14m fine from U.S. and UK regulators for favoring one client over another.

A spokeswoman from the $7.4bn UK asset manager told AsianInvestor that the closure of the China-focused hedge fund after 10 years, marks the end of the once-profitable strategy. The fund has been operating with less than $10m in assets and its liquidation is currently underway.

In August this year, the U.S. SEC fined Martin Currie $8.3m and the UK’s Financial Services Authority slapped another $5.6m fine on the firm for causing a U.S. publicly-traded advisory client, The China Fund, Inc., to make an unfavorable investment in bonds in order to prop-up another advisory client, the Martin Currie China Hedge Fund.

Data showed that the hedge fund bought $10m of illiquid bonds issued by Hong Kong-based Jackin International. The China Hedge Fund got into trouble during the financial crisis when it faced an increase in redemption requests from investors, while, simultaneously, Jackin became unable to service the bonds. To a......................

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