In August 2011, the asset manager failed to put in place adequate controls in its fixed income front office, provided inaccurate information to the regulator and failed to correct the inaccurate representation for four months.
Gersamia, who has since been dismissed, initiated, executed and booked a $150m trade on behalf of Threadneedle funds at four times its market value. He did not have the authority to make the trade.
Threadneedle identified and stopped the trade and reported it to the then regulator the FSA. Had the trade settled, it could have caused a $110m loss to Threadneedle’s funds.
At the time, the FSA had said it was concerned about, among other things, the risks of fund managers initiating, booking and executing their own trades.
A spokesperson for Threadneedle said: “While we are pleased to have thwarted a complex attempted fraud, we regret that a subsequent review of our fixed income trading identified areas of weakness.
“In July 2013 an independent auditor appointed under FCA instruction confirmed the weakness had been fully addressed. In addition, a communication to the regulator was not sufficiently clear and we have apologised for this.
“We have co-operated with the regulator throughout the investigation. We are pleased to move on from these historic events and continue to focus on delivering for our clients”.
The firm has since implemented a comprehensive upgrade of its fixed income systems and controls, and it is confident that its controls now meet or exceed regulatory expectations and industry standards.
The total fine was £6,038,504, which without a 20% Stage 2 settlement discount, would have been £7.55m.
Threadneedle’s £192.6m Emerging Market Bond fund has been managed by Henry Stipp since April 2012.