The FCA said it was not able to name Greensill Capital as a party in the matter until now. Greensill, a supply-chain finance business, has collapsed causing losses for a number of firms.

The UK’s Financial Conduct Authority has named Greensill Capital, the stricken UK supply-chain finance firm, as one of the parties involved in a saga that led to the FCA’s £9.1 million ($11.9 million) fine of GAM International Management Limited.

It also had punished former senior manager Timothy Haywood late last year. (See that report here.) The regulator said that Haywood received gifts and entertainment, including travelling on a Greensill private aircraft, without disclosing these in a "timely manner."

Back in December, without naming Greensill, the FCA acted against GIML and Haywood. GIML is part of GAM Holding, the Zurich-listed group. Haywood was ousted by GAM in early 2019 after an internal probe found that he was involved in “gross misconduct.” The FCA’s findings relate to the period 28 November 2014 to 8 March 2018 for GIML, and 20 October 2016 to 8 January 2018 for Haywood.

A spokesperson at the FCA said that until yesterday it had not been possible to name Greensill as a party in the case. 

Fired
GAM sacked Haywood more than two years after its internal investigation found that he was involved in "gross misconduct." The business had suffered outflows caused by GAM liquidating the £8.5 billion unconstrained/absolute return bond strategy (ARBF), headed up by Haywood, after high levels of redemption requests forced the firm to freeze the assets following his suspension on 31 July 2018. As reports at the time said, GAM found that "in certain instances Haywood may have failed, in our judgement, to conduct or evidence sufficient due diligence on some of the investments that were made, or make accessible internal records of documents relating to these."

Haywood had been the investment director and business unit head at GIML.

Yesterday, the UK regulator said that GIML “failed to manage conflicts of interest arising from three transactions, two of which were linked to Greensill Capital (UK) Ltd where Mr Haywood was the investment manager making investment decisions.”

“Potential incentives were offered which would have provided benefits to GIML or its parent company.  Although these were not taken up, they were not dealt with properly by GIML,” the FCA continued. “Conflict of interest policies were not followed and, as a result, any potential conflicts were not considered by those who should have been responsible for doing so.”

Greensill’s financial woes hit a number of banks and other financial firms, such as the asset management arm of Credit Suisse. The affair has caused political embarrassment. Former UK Prime Minister David Cameron was a lobbyist for the collapsed Greensill business, although he was not accused of wrongdoing.

In its statement yesterday, the FCA said that Haywood “received gifts and entertainment, including travelling on a Greensill private aircraft, but failed to record them in a timely manner with GIML.”

“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,” it said. 

The FCA said that GIML and Haywood agreed to resolve the cases against them at an early stage of the FCA’s investigation and therefore qualified for a 30 per cent discount. Haywood’s fine includes the £22,437 of the value of the gifts and entertainment he did not record in a timely manner.

“A robust framework, properly implemented and followed by all staff, is required to manage any conflicts of interest. GIML failed to do this. In an asset manager, this is vital in ensuring decisions are taken for the benefit of the investors. Mr Haywood’s disclosure failings are equally serious ones,” Mark Steward, executive director of enforcement and market oversight at the FCA, said. “The FCA expects asset managers and their staff to be scrupulous in identifying and managing conflicts and their risks. This case should send a clear warning to the market.”