On December 10, 2015, the FCA issued Threadneedle Asset Management Limited with a £6,038,504 fine for not having adequate controls in place for its fixed income desk, providing inaccurate information to the FCA and failing to correct its inaccurate representation for four months. Threadneedle was asked in April 2011 by the FCA's predecessor, the Financial Services Authority, to address concerns raised about the number of errors originating from its fixed income desk including its Emerging Markets Debt desk, as well as concerns about fund managers initiating, booking and executing their own trades. Threadneedle advised the FSA that it had employed individuals that had taken on responsibility for all aspects of dealing on those desks. However, the individuals had not actually taken on all the responsibilities. Shortly after Threadneedle's response, a fund manager on the Emerging Markets Debt desk initiated, executed and booked a $150 million trade at four times its market value without having the authority to make the trade.
The trade was not settled as the problem was identified in time by Threadneedle's outsourced back office. The trade— had it not been identified in time, and had gone on to settle—could have caused a $110 million loss to client funds.
The FCA notice is available at: http://www.fca.org.uk/static/fca/documents/final-notices/threadneedle-asset-management.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
