FCA fines BlueCrest $55 million over staff fund failings

The Financial Conduct Authority (FCA) also said it was requiring BlueCrest to redress clients who had suffered losses as a result of its failings

Britain’s markets watchdog said on Wednesday it will fine hedge fund BlueCrest Capital Management £41 million ($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 (FCA) said in a statement.

The Financial Conduct Authority 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 Financial Conduct Authority 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.

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, BlueCrest said in a statement.

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, it said.

BlueCrest Capital Management is Europe’s third-biggest hedge fund firm, managing more than £30 billion.

The U.S. Securities and Exchange Commission (US SEC) last year ordered BlueCrest to pay $170 million to investors harmed by the creation of the internal fund.