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Alternative Market Briefing

FCA fines Invesco Perpetual GBP18m for misleading derivatives disclosure

Monday, June 09, 2014

Komfie Manalo, Opalesque Asia:

The United Kingdomís regulatory body, Financial Conduct Authority (FCA), recently fined Invesco Asset Management Limited and Invesco Fund Managers Limited (together Invesco Perpetual) £18m for a range of compliance breaches, including failing to ensure that its KIIDs were prepared in compliance with the applicable requirements.

International law firm Dechert said in its On Point Legal Update that apart from determining there were shortcomings in the KIIDs or Key Investor Information Documents, Invesco is also charged of various breaches of applicable investment limits and failing to put adequate controls in place to ensure that all funds were valued accurately and that all trades were allocated fairly between funds. The notice also details the rationale for the fine in each case.

"The fund may use derivatives (complex instruments) in an attempt to reduce the overall risk of its investments or reduce the costs of investing, although this may not be achieved," the FCA said.

However, the FCA noted that the effect of the use of derivatives by the UCITS was not confined to the matters specified in this statement in the KIID and as such it was misleading.

There is a specific obligation for KIIDs to specify the main categories of eligi......................

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