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British regulator fines Threadneedle Asset Management
[LONDON] Britain's financial services industry regulator has fined Threadneedle Asset Management £6 million (S$12.8 million) for past control failures in its fixed income area, providing inaccurate information to the watchdog and for failing to promptly correct the inaccuracies.
The Financial Conduct Authority (FCA) said on Tuesday deficiencies on the company's emerging markets debt desk allowed a fund manager to initiate, execute and book a US$150 million trade which, had it settled, could have caused a US$110 million loss to client funds.
Threadneedle said it identified and stopped the trade and reported it to the then FSA. The employee concerned was fired, and a review of systems and processes followed.
The asset manager also said it was the intended victim of an attempted fraudulent trade involving collusion between a Threadneedle employee, an external broker and an entity regulated by the Financial Services Authority, predecessor to the FCA, in August 2011.
The regulator ordered Threadneedle to appoint an independent monitor, known as a Skilled Person, to ensure that weaknesses in its systems and controls were addressed. The subsequent overhaul concluded around July 2013.
The FCA also found that a June 2011 assessment of Threadneedle's front office operating controls did not fairly reflect processes in place on its high yield and emerging market debt desks. Almost £2 million of the fine imposed on Tuesday related to these shortcomings. "We are confident the issues identified have been fully addressed and are pleased to move forward and continue to focus on delivering for our clients," Threadneedle said.