UK watchdog fines hedge fund BlueCrest $55 million over staff fund failings

By Carolyn Cohn

LONDON (Reuters) -Britain's markets watchdog said on Wednesday it will fine hedge fund BlueCrest Capital Management UK 41 million pounds ($54.50 million) for conflict of interest failings over a fund set up for BlueCrest staff.

Between October 2011 and December 2015, BlueCrest failed to manage fairly a conflict of interest created by switching portfolio managers working on a fund open to investors outside BlueCrest to an internal fund open only to its partners and employees, the Financial Conduct Authority said in a statement.

The FCA said this led to a "sub-standard investment management service" being offered to outside investors by BlueCrest, which was co-founded by billionaire Michael Platt in 2000.

The FCA also said it was requiring BlueCrest to redress clients who had suffered losses as a result of its failings.

It said its findings were provisional as BlueCrest had chosen to refer the case to a further tribunal which would decide the appropriate action, if any, for the FCA to take.

BlueCrest said in a statement it planned to "vigorously defend against the FCA's allegations".

It said the fund converted in January 2016 to a private investment partnership, no longer managing external funds.

The U.S. Securities and Exchange Commission https://www.reuters.com/article/uk-sec-bluecrest-idUKKBN28I2AF last year ordered BlueCrest to pay $170 million to investors harmed by the creation of the internal fund.

($1 = 0.7523 pounds)

(Reporting by Carolyn Cohn, Editing by Abhinav Ramnarayan, Barbara Lewis and David Evans)