Warning Notice Statements For GAM International Management and Timothy Haywood
In 2018 the FCA launched an investigation into Swiss asset management firm – GAM International Management Limited (GIML). The investigation was prompted by allegations concerning Timothy Haywood, former head of GAM’s Absolute Return unit, and his risk management and record keeping issues.
Following the FCA’s investigation, GIML received a financial penalty of £9.1m, while Mr Haywood was handed a £230,037 fine, all related to conflicts of interest and gifts and entertainment issues.
The FCA notice, stated that GIML breached Principle 2 of their Principles for Business when it ‘failed to conduct its business with due care, skill and diligence’. In particular, GIML failed to ensure that its systems and controls for prevention of conflicts of interest operated effectively during the period between November 2014 and October 2017.
Moreover, between October 2016 and March 2018, GIML failed to manage conflicts of interest relating to three specific investments made by the Absolute Return unit – a unit that Mr Haywood was a head of at the time.
In Mr Haywood’s notice, the regulator stated that between March 2017 and January 2018, Mr Haywood breached Statement of Principle 7. ‘‘When performing an accountable significant-influence function at GAM International Management Limited (GIML) he 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.’’ The FCA also added that Mr Haywood breached Principle 2 by failing to act with “due skill care and diligence”.
It is interesting to note, that the regulator did not go into as much detail about the case as it normally would, as it noted that a third party ‘’not subject to the notices’’ may be affected by them. The third party’s reputation could be damaged by being named in the FCA action, although entirely innocent of the GIML wrongdoing.
For all regulated firms, the FCA’s enforcement, indicates that where conflicts of interest are not identified and managed effectively it is an area where the regulator will intervene.
If you require any help with identifying conflicts of interest within your firm or wish to review your current policies and procedures, Complyport can assist. Please contact Jonathan Greenstein via firstname.lastname@example.org to book in a free consultation.
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