Mon, Feb 27, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

UK FSA bans and fines ex-BlueBay fund manager for deceiving investors

Thursday, February 04, 2010
Opalesque Industry Update – The former manager of BlueBay Asset Management’s defunct hedge fund Simon Treacher was banned by the UK Financial Service Authority (FSA) for massaging his performance figures. He was also fined $224,000 (GBP140,000), various media reports said.

A Bloomberg report said that Treacher, formerly in charge of BlueBay’s $1.24bn Emerging Market Total Return Fund, cut and pasted figures into seven broker quotes in 2008 to make it appear that the fund’s value had increased by $27m. The fund’s investors lost an estimated $650,000 for his actions, which BlueBay was forced to repay.

Darren Fox, a regulatory lawyer at London-based Simmons & Simmons was quoted by Bloomberg as saying: “It shows that the FSA has hedge fund managers firmly in their cross-hairs after Galleon. It also shows that the FSA is minded that banning an individual is the kind of punishment that hits hardest, by taking away people’s livelihoods.”

WSJ.com said the FSA found Treacher guilty of altering seven documents to support positions he had mismarked in his portfolios to make it appear that the fund returned positive results from July to September 2008. Collaboration between hedge fund managers and administrators is a common practice, especially in illiquid instruments, although critics said this method increases chances for deception.

BlueBay said it reported the irregularities to the FSA when it noticed a discrepancy in recorded prices at the end of September 2008 and began an internal investigation in November 2008, according to the Financial Times. Treacher was forced to resign from the company and BlueBay closed down the fund in November 2008.

The fund had lost more than 80% of its value in the year before the closure.

BlueBay announced in 2008 that its decision to wind down the fund had “no connection” with Treacher’s misconduct, which had “no material impact” on net asset value of the fund. The firm said Treacher was forced to resign on violation of internal valuation policies, said the Daily Mail.

The financial regulator said in a statement: “The FSA views Treacher's misconduct as particularly serious because he was an approved person carrying out a controlled function, and a senior and experienced portfolio manager who was fully aware of his responsibilities.”

Meanwhile, the London-based manager of fixed income funds reported that its assets under management (AuM) posted a 10% increase as of end-December 2009. From $31.1bn in 30-Sept, BlueBay’s AuM jumped to $34.3bn, which was the firm’s fiscal second quarter.

A BusinessWeek report said the firm believed that the return of investors to credit markets caused the rise in their AuM.

The rise in its AuM was a significant leap after BlueBay said in its annual report on 30-June-09 that its assets had risen to $24.3bn from $21bn during the period. However, despite the rise in AuM, BlueBay’s profits declined from GBP115m (Eur128m) to GBP101m at the end of its fiscal year, as the money flowing into lower margin long-only strategies failed to offset the impact of the decline in higher margin long/short assets. – written by PD –


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Legal - Fannie, Freddie shares dive after U.S. appeals court ruling[more]

    From Reuters.com: Shares of Fannie Mae and Freddie Mac tumbled more than 30 percent on Tuesday after a U.S. appeals court shut down efforts by hedge funds and other investors to pursue numerous legal claims accusing the U.S. government of seizing their profits following taxpayer bailouts. By a

  2. Institutional investors plan to raise allocations to alternative assets in 2017[more]

    Komfie Manalo, Opalesque Asia: A survey by Context Summits Miami showed that nearly 72% of institutional investors and family offices plan to raise their allocations to alternative asset managers this year, suggesting continued strong demand for the industry. "As many large, brand name f

  3. Comment - Mortgages, mergers and hedge fund fees, Fairholme's Berkowitz responds to court ruling against hedge fund suits of Fannie Mae[more]

    Mortgages, mergers and hedge fund fees From Bloomberg.com: Yesterday the U.S. Court of Appeals for the D.C. Circuit handed down an odd decision in a lawsuit over the government's nationalization of Fannie Mae and Freddie Mac. The key issue is what's called the "Third Amendment," the 2012

  4. Investing - Hedge funds continue to chase the herd in record Momentum wager, Marshall Wace bets grocer Sainsbury may need rights offering, Hedge fund net exposure has started to retreat, David Tepper's Appaloosa fund makes a huge buy, The 10,000-mile journey to Short Australia, Skeptical hedge fund investors grill Evan Spiegel about Snap's I.P.O.[more]

    Hedge funds continue to chase the herd in record Momentum wager From Bloomberg.com: Hedge funds can't get enough of momentum - even if it means embracing an investing strategy they hate. Loosely defined as betting on shares that went up the fastest over the preceding nine-to-12 months, h

  5. Opalesque Exclusive: Swiss investors take fund seeding and acceleration into their own hands[more]

    Benedicte Gravrand, Opalesque Geneva: Banque Bonhote, a 200-year old Swiss private bank, last year launched a community of investors - heads of Swiss family and advisory offices and wealth managers - with the aim of co-investing in the kind of managers they wanted to invest in, either by way of s