British financial regulator Financial Conduct Authority (FCA) has imposed a £6m fine on Threadneedle Asset Management (TAML) for past control failures in its fixed income area, providing inaccurate information to the regulator and for failing to promptly correct the inaccuracies.
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The failings in the fixed income front office enabled a fund manager to initiate, execute and book a $150m trade that could have incurred a $110m loss for client funds.
The regulator said it wrote to Threadneedle in April 2011 asking TAML to address a number of concerns, including mistakes occurring on the fixed income area, including the EM debt desk, as well as the risk of fund managers initiating, booking and executing their own trades.
In June 2011, the asset manager said it had addressed the regulator’s concerns by appointing individuals to manage the fixed income trading desks.
"This overstated the position. In fact, the individuals had not taken on all the responsibilities outlined in TAML’s response and consequently, the FSA’s concerns had not been fully addressed," FCA said in a statement.
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By GlobalDataSoon after TAML submitted its response to FCA, a fund manager on the Emerging Markets Debt desk initiated, executed and booked a $150m trade on behalf of TAML funds at four times its market value.
Threadneedle’s back office identified the trade and didn’t settle it. The fund manager did not have the authority to make the trade.
