The Financial Conduct Authority (FCA) has fined the UK arm of Switzerland’s GAM £9.1 million and Tim Haywood £230,037. Fines would have totalled much more but both parties qualified for 30% discounts due to cooperation resolving the investigation.
GAM was fined for “failing to manage conflicts of interest” related to three investments made by the company’s Absolute Return and Long Only funds between 2016 and 2018.
Haywood, who worked at GAM between 2009 and 2019, was fined for failing to manage conflicts of interest and for breaking GAM’s gifts and entertainment policies.
Specific details weren’t given as the FCA said it needed to give an unnamed third party included in the report a chance to respond.
Peter Sanderson, GAM CEO, said: “We fully accept the findings of the FCA and acknowledge the conflicts of interest shortcomings which occurred at the firm between late 2014 and early 2018.
“Since then we have significantly strengthened our senior management team, governance, control frameworks, policies and training to ensure that all lessons learned from that period are fully embedded into our firm and culture.”
Tim Haywood said: “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.”
The FCA opened its probe in 2018 after the Swiss asset manager suspended Haywood following an internal investigation. Haywood was ultimately sacked a year later for “gross misconduct”.
GAM said the investigation had discovered “issues relate to some of his risk management procedures and his record keeping in certain instances.”
Haywood managed £11.9 billion of client funds invested in bond and supply chain finance funds.
Haywood’s funds invested significant sums in debt instruments arranged by Greensill Capital, the controversial supply chain finance company that collapsed at the start of the year. Many of the notes Haywood bought were linked to Sanjeev Gupta’s GFG Alliance, the steel alliance that has been forced into a painful restructuring after Greensill’s collapse.
GAM decided to liquidate Haywood’s flagship fund, the Absolute Return Bond Fund (ABRF), shortly after suspending him as investors rushed to redeem funds. The firm ultimately returned 100.5% of the £5.9 billion held in the fund at the time of suspension.
Sanderson said: “Our priority has always been, and remains, protecting the best interests of our clients. With all regulatory matters now concluded, we are looking forward and are focused on our strategy of bringing GAM back to growth.”
Sanderson became CEO in 2019. Predecessor Alexander Friedman resigned in 2018 in the wake of the Haywood situation.
Haywood said: “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.
“Thank you to my family, friends, former colleagues, industry veterans and institutions who stood by me throughout this ordeal.”