Regulator fines Martin Currie for poor advice
The Financial Services Authority (FSA) has fined Martin Currie Investment Management £3.5m for failing to manage a conflict of interest between two clients.
The asset manager will also be fined $8.3m (£5.1m) by the Securities & Exchange Commission (SEC) in America. The regulator says Martin Currie caused one client “to enter into an ill-advised transaction which rescued another client from serious liquidity concerns”.
Both clients’ funds focused on investments in China and were managed by the firm from its Shanghai office. The regulator accuses the firm of being slow to identify the conflict of interest and manage it fairly.
Tracey McDermott, the acting director of enforcement and financial crime at the FSA, says: “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 firm settled at an early stage, receiving a 30% discount on the original £5m fine, and cooperated fully with the regulator’s investigation. (article continues below)
In a statement, Martin Currie claims the unlisted investments business to which the fines relate has been closed.
The firm reported itself to both British and American regulators and has since reinforced its management and governance structure.
Willie Watt, the chief executive of Martin Currie, says: “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.”The firm says a recent £25m injection had helped boost the firm’s capital resources of more than 300% of its regulatory capital requirement.