UK markets watchdog fines hedge fund Bluecrest Capital £40m
The UK financial regulator has fined hedge fund Bluecrest Capital Management £40.8m for failing to fairly manage a conflict of interest.
The Financial Conduct Authority (FCA) said that between 01 October 2011 and 31 December 2015, Bluecrest failed to fairly manage a conflict of interest which resulted from allocating portfolio managers working on an external fund, open to investors outside Bluecrest, to an internal fund, open only to its partners and employees.
The hedge fund’s systems and controls did not manage the risk that portfolio managers could be allocated in a way that favoured investors in the internal fund over those of the external fund the FCA explained. According to the FCA “a sub-standard investment management service” was provided to investors at the external fund by the hedge fund, which was co-founded by billionaire Michael Platt in 2000.
Bluecrest told Morning Wire it intends to fight the allegations. “Given the ongoing legal process, we are not in a position to comment on our case which is now before the Upper Tribunal. However, we intend to vigorously defend against the FCA’s allegations which relate to conduct that occurred six to ten years ago.
“In January 2016, we converted into a private investment partnership, and as such, this case does not relate in any way to our current business operations,” the spokesperson added.
The FCA has also imposed a requirement on Bluecrest to pay redress to clients who have suffered loss as a result of its failings. The case will also be referred to a tribunal who will determine what further action, if any, the FCA should take.
The decision comes after the US’ Securities and Exchange Commission last year ordered BlueCrest to pay $170m to investors harmed by the creation of the internal fund.
In November the FCA announced reform plans to speed up its decision making process amid heavy criticism over repeated failures to protect customers.
Read more: FCA to speed up decision making process amid backlash