FCA fines Threadneedle Asset Management £6m

The Financial Conduct Authority has fined Threadneedle Asset Management £6m for failing to put in place adequate controls in the fixed income area of its front office and misinforming the regulator.

The FCA said that failings on the emerging markets desk meant a fund manager was able to book a $150m trade, which could have caused a $110m loss to the relevant client funds had it settled.

In April 2011, the FCA wrote to Threadneedle to ask it to address specific concerns about the fixed income area, including the EM debt desk.

The regulator was concerned about the number of errors occurring in that area as well as the risks of fund managers initiating, booking and executing their own trades.

Threadneedle responded in June by stating that it had appointed individuals to be responsible for all aspects of dealing on the relevant desks, including the EM debt desk, and that the individuals had taken on those responsibilities.

However, the FCA said this “overstated” the position.

“In fact, the individuals had not taken on all the responsibilities outlined in TAML’s response and consequently, the FSA’s concerns had not been fully addressed,” it said.

The $150m was executed shortly after Threadneedle submitted its response to the FCA, which said the fund manager did not have the authority to make the trade.

Threadneedle’s outsourced back office identified the problem and did not settle the trade.