FSA bans hedge fund manager and fines him £140,000 for ‘mis-marking’ – On 3 February 2010, the FSA published the Final Notice it has issued to Simon Treacher, a London-based hedge fund manager, prohibiting him from carrying on any controlled functions, and fining him £140,000. Mr Treacher was employed as a portfolio manager in the Emerging Markets team of Bluebay Asset Management plc (Bluebay). As such, he was approved to carry out the customer function, controlled function 30.
During the course of an internal investigation, Bluebay discovered that, between August and October 2008, Mr Treacher had mis-marked positions in two of the investment funds he managed by altering seven documents used in support of the month end valuation for specific assets. He carefully cut out and pasted different figures into the valuation line of seven legitimate broker quotes valuing the fund assets. All the alterations justified a more advantageous price for the assets, that is, higher where the funds were long and lower where the funds were short. The total impact of his actions was an over-valuation of the relevant portfolios by approximately $27 million over three months. This resulted in investors being financial disadvantaged by approximately $650,000, for which Bluebay has fully compensated them.
Bluebay referred Mr Treacher’s conduct to the FSA’s Enforcement Division for investigation in April 2009. During two FSA interviews, Mr Treacher provided misleading information regarding the method used to alter documents and the process by which they were included in the month end valuations.
The FSA found that Mr Treacher’s conduct demonstrated that he was not a fit and proper person to carry out regulated activities and that he had breached Statement of Principle 1 of the FSA’s Statements of Principle for Approved Persons by failing to act with integrity.
Margaret Cole, FSA Director of Enforcement said: “Our actions in banning Simon Treacher and imposing a significant fine will send a powerful message of deterrence to others who might be tempted to behave in this way.”
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