A senior fund manager at Capital Group has been forced to resign after 36 years following a BBC Panorama investigation that alleged he had privately invested in some of the same companies as the funds he ran.
Mark Denning, who was part of a team managing more than £229bn for clients at Capital Group, is alleged to have secretly acquired shares for his own benefit using a secretive fund based in Lichtenstein called Morebath Fund Global Opportunities.
Fund managers are forbidden from investing in the same companies as their funds, because they could potentially profit at the expense of investors.
Morebath holdings revealed in leaked documents
Leaked documents, seen by the BBC, show the fund had invested in a medical research company called Mesoblast, an Indian film company called Eros International and a gold mining company called Hummingbird Resources – all firms that Capital Group funds also invest in.
Investments in Mesoblast and Eros were made by funds co-managed by Denning, the BBC found.
The documents also revealed a conflict of interest in the case of Hummingbird Resources which was set up and run by Denning’s son-in-law.
‘Serious conflict of interest’
A legal expert told the BBC Denning’s private investments represent a serious conflict of interest.
Michael Ruck, investigations partner at TLT, said: “If there was an intention by the fund manager to financially benefit themselves, then that does raise serious concerns in relation to their actions.”
Denning, who denies any wrongdoing, left his role five days after Panorama wrote to Capital Group.
Capital Group confirmed Denning is no longer with the firm.
A statement from the company said: “We have a code of ethics and personal investing disclosure requirements that hold our associates to the highest standards of conduct. When we learned of this matter, we took immediate action.
“Mark Denning was one of a team of investment managers on each of the funds he served on.”
He was a named manager on four Capital Group funds – American Funds EuroPacific Growth; American Funds Capital World Growth and Income; American Funds New World; and American Funds New Economy.
