Peter Moore Opalesque Industry Update - Peter Moore, head of regulation at The IMS Group, comments on how the FSA’s significant fine and banning for life of hedge fund manager Michiel Visser highlights the age-old need for independence between key functions at firms of all sizes
"The news that the FSA has struck off and fined Michiel Weiger Visser, CEO of failed Mercurius Capital Management, highlights how potential investors should consider the quality of all the components of an asset management firm and not simply the experience and track record of the front office (investment) staff. Potential investors should seek assurance (and supporting evidence) of the independence of all the firm’s functions. Specifically, they should look for quality and depth across the whole firm.
"This case reveals how badly things can go wrong with a single senior executive omnipresent across the activities of the entire firm. Segregation between such functions is essential to ensure and preserve integrity in their performance. It’s also required under the FSA’s rules for senior management. This case should not be taken as evidence that hedge fund managers are comparatively more susceptible to this kind of behaviour, described by the Tribunal as the worst to come before it. This was a spectacular failure by a financial services firm to construct itself properly, likely from the outset. The required quality in systems and controls will be achievable at firms of all sizes if there is a desire to achieve this standard by senior management. Furthermore, investors in funds are likely to increasingly insist on it."
The IMS Group is a market leading provider of regulatory compliance consulting and integrated business support to the asset management and securities industry. www.theimsgroup.co.uk