A further penalty of $8.3m (£5.1m) has been handed out by the US Securities and Exchanges Commission (SEC), bringing the total fine to around £8.6m.
Martin Currie steered its US-based China Fund, which was run by Chris Ruffle, into an investment to bolster a hedge fund that had acquired a significant and largely illiquid exposure to a single company. The group directly alleviated the hedge fund’s liquidity problems by deciding to use the China Fund — to the detriment of the fund and its shareholders — in a bond transaction that reduced the hedge fund’s exposure.
Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said it was no excuse that some of the failings resulted from the actions of individual fund managers.
“The primary responsibility for ensuring compliance with a firm’s regulatory obligations rests with the firm, and senior management must ensure that there are adequate systems and controls in place to manage conflicts and to oversee the actions of employees. The action taken by both ourselves and the SEC should leave firms in no doubt about the serious consequences of this type of failure.”
Martin Currie said it has reached fully agreed settlements with both regulators. Chief executive Willie Watt said: “The issue relates to three unlisted investments that originated back in 2007 in a specialist part of our business. We compensated the affected client and returned all related fees earned. Following our comprehensive review, significant improvements have been made to our business including reinforcements to our governance function, changes to our management team and closing the unit down.
"It is good to reach the end of the regulatory process, and put this behind us allowing for the business to move forward.”
