The financial market supervisor in the United Kingdom, the Financial Conduct Authority (FCA ), has published a decision notice against BlueCrest Capital Management (UK) LLP (BCMUK), seeking a penalty of more than £40.8 million.
The heavy fine against BCMUK came as the British regulator alleged that between October 2011 and December 2015, the hedge fund failed to manage a conflict of interest. It was created by allocating portfolio managers, who were working on an external fund that was open to outside investors, to an internal fund meant only for BlueCrest partners and employees.
“The FCA found that BCMUK’s systems and controls did not manage the risk that portfolio managers could be allocated in a way that favoured investors in the internal fund over those of the external fund. This resulted in a sub-standard investment management service being provided to the external fund and its investors,” the regulator stated.
An Appeal against the Regulatory Decision
Additionally, the agency is asking the hedge fund to pay redress to the clients who were impacted by the conflict of interest failure.
However, BlueCrest is challenging the UK regulator's decision and has referred the case to the Upper Tribunal, which will now determine the appropriate action.
“The findings in the Decision Notice are provisional and only reflect the FCA’s views at this stage since BCMUK has yet to make representations,” the regulatory announcement added.
Meanwhile, multiple British regulators have successfully imposed hefty fines on a few financial companies for compliance lapses. NatWest was recently made to pay £264.8 million for FCA’s charges, followed by a £63.9 million penalty on HSBC for anti-money laundering failures. Furthermore, Standard Chartered was slapped with a £46.5 million fine earlier this week for regulatory reporting failures.
In a statement shared with Finance Magnates, BlueCrest Capital said: "Given the ongoing legal process, we are not in a position to comment on our case which is now before the Upper Tribunal. However, we intend to vigorously defend against the FCA’s allegations which relate to conduct that occurred six to ten years ago."
"In January 2016, we converted into a private investment partnership, and as such, this case does not relate in any way to our current business operations."
