The UK’s Financial Conduct Authority (FCA) has fined Gam International Management £9.1m ($12.1m) and the firm’s former top bond manager Tim Haywood £230,037 for conflicts of interest and gifts and entertainment matters, reports our sister publication, International Adviser.
Both the firm and Haywood agreed to resolve all issues of fact and liability and so they qualified for a 30% discount.
The financial penalties would have been £13m and £319,044, respectively, had they not agreed to resolve the case.
Haywood was sacked by Gam in 2018 for “gross misconduct”, which led to the liquidation of his multi-billion pound fund range and sent assets toppling.
This led to a bitter dispute but, in 2019, the two parties buried the hatchet at the end of a legal case at the employee tribunal, and agreed that neither would pursue the matter further “based on current facts”.
Findings
The UK regulator issued two warning notices on 16 December 2021 outlining the cases against Gam and Haywood.
The FCA found:
- Between 28 November 2014 and 25 October 2017, Gam breached principle 2 of the FCA’s Principles for Business by “failing to conduct its business with due care, skill and diligence”;
- Between 20 October 2016 and 8 March 2018, Gam breached principle 8 of the FCA’s Principles for Business by “failing to manage conflicts of interest fairly between itself and its customers and different customers”. In particular, the FCA “considers that Gam failed to adequately control the conflicts of interest arising out of three specific investments made by the Absolute Return and Long Only team during this period”;
- Between 20 October 2016 and 3 November 2017, Haywood “failed to take reasonable steps to ensure that the business of the firm for which he was responsible, complied with the relevant regulatory rules requiring that conflicts of interest were managed fairly” and “this breach arose from two investments made by the Absolute Return and Long-Only team during this period”;
- Between 29 March 2017 and 8 January 2018, Haywood “failed to comply with the gifts and entertainment policy of his employer”.
The FCA said it was not able to provide full details of the case as it involves another party who is not a subject of the final notices, and they may be affected by them. The party will need to be consulted first and be provided with an opportunity “to make representations on the references to it before publication is possible”.
The regulator added that it will “publish final notices when it is able” and at the time being it “cannot comment further”.
Haywood apologizes
Haywood said in a statement: “I am glad to resolve this matter after such a long time. I am truly sorry for the mistakes that I have made and I have learnt a series of very important lessons.
I respect the findings of the authority who have undertaken an extremely extensive investigation over many years into all manner of allegations and accusations. I now look forward to returning to an active role in the industry and will make my plans public in due course.
“I am pleased that clients of the Absolute Return Bond fund range and associated mandates saw a full return of their money, and for some fund share classes, more than 100%.
“Gam International Management and Gam have many excellent people, notably tremendous investment expertise, outstanding customer-facing staff and really dedicated support teams. I wish them, and the firm for which I worked for many years, all the very best in the future.
“Thank you to my family, friends, former colleagues, industry veterans and institutions who stood by me throughout this ordeal.”
