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Former GAM star Tim Haywood breached guidelines over Greensill, UK regulator finds

The Financial Conduct Authority has dominated that GAM’s former star fund supervisor Tim Haywood breached the agency’s presents and leisure coverage when he accepted a private journey to Sardinia on Greensill Capital’s personal jet.

The FCA disclosed the breaches in notices setting out why it fined GAM and Haywood final yr. The regulator introduced in December that it had fined GAM £9.1mn, alongside a smaller £230,037 penalty imposed on Haywood, however didn’t initially launch its full findings. 

“Although the FCA did not find evidence that Mr Haywood made investment decisions because of these gifts and entertainment, the fact that conflicts were not properly managed heightened the risk that he may have been incentivised to invest for personal interest,” the FCA mentioned, noting that the return flight on Greensill’s personal jet was valued at £15,000.

GAM failed to make sure its methods for stopping conflicts of curiosity operated successfully and failed to regulate conflicts of pursuits relating to a few investments, together with two referring to Greensill, in response to the FCA.

The collapse of Greensill Capital a yr in the past sparked a sprawling company and political scandal, engulfing scandal-prone Swiss lender Credit Suisse and former British prime minister David Cameron.

Tim Haywood
Tim Haywood: ‘I am very sorry for the things that I got wrong, with my failings described in the FCA summary’

The Financial Times first revealed in 2019 that Haywood took the journey on Greensill’s personal jet. Greensill’s use of personal jets to woo purchasers got here underneath scrutiny final yr, with the FT revealing that Cameron had used the plane to fly to his vacation house in Cornwall.

Haywood failed on events “to act with due skill, care and diligence” by breaching the asset administration group’s presents and leisure coverage, the FCA mentioned.

Haywood had advised GAM in early 2018 that he had declared all related presents and leisure and complied with the agency’s insurance policies throughout 2017. “These attestations were inaccurate,” the FCA mentioned within the discover. After GAM started an inner probe, Haywood disclosed the Sardinia flight, flights on a Greensill plane for enterprise journeys referring to Greensill property, and attendance at a charity dinner at Buckingham Palace.

“I am very sorry for the things that I got wrong, with my failings described in the FCA summary. I have taken on board key lessons, and will strive to be a better investment manager in the future”, Haywood mentioned on Wednesday.

“I believe that the investment decisions taken by [GAM], and by me on [GAM]’s behalf, were indeed taken in the best interest of clients,” he mentioned, including that “every Greensill-related bond paid every sum due, on time and in full, during my employment at GAM”.

The FCA discovered that Haywood, who invested greater than £1.5bn of consumer cash into Greensill-linked property, had “failed to take reasonable steps to ensure that [GAM] fairly managed conflicts of interest issues” from two Greensill investments. 

In one of many transactions, GAM’s funds lent round £110mn to Greensill, through a special-purpose automobile known as Laufer, named after a creek on the financier’s household watermelon farm in Australia.

The FT reported this week that Greensill additionally provided GAM an fairness warrant and the potential for further charges on one other fund. The FCA dominated that these “potential incentives” created a battle of curiosity between GAM and its purchasers.

“As a result of there being a potential benefit to [GAM] itself in supporting the financial health of Greensill, there was an incentive for [GAM] to invest its clients’ funds in Laufer 1 for its own benefit,” the FCA mentioned, noting that the Laufer deal was “financially beneficial to Greensill” and refinanced its money owed “on more favourable terms”.

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