By Ian Walker
LONDON--The U.K. Financial Conduct Authority said Tuesday it has
fined Aviva Investors Global Services Ltd. 17.61 million pounds
($26.87 million) for systems and control failings, leading to a
failure to manage conflicts of interest fairly.
Between Aug. 20, 2005 and June 30, 2013, Aviva Investors
employed a side-by-side management strategy on certain desks within
its fixed income area whereby funds that paid differing levels of
performance fees were managed by the same desk.
In May 2013, Aviva Investors found evidence suggesting that two
former fixed-income traders had been delaying the booking of, and
improperly allocating, trades. Aviva Investors sought to ensure
that none of the funds it managed were adversely impacted by this
conduct and paid GBP132 million compensation to eight impacted
funds, the FCA said.
Since discovering the failings, Aviva Investors and its senior
management have worked with the FCA and have committed significant
resources to investigating and addressing the weaknesses in its
control environment, making significant improvements, which include
enhancing governance, strengthening its control framework and
seeking to embed an appropriate culture under the leadership of a
new management team.
Given this co-operation, and because it agreed to settle early,
Aviva Investors received a 30% discount to the fine, the FCA
said.
"While Aviva Investors' failings were serious, the FCA has
recognised that its actions since reporting its failings were
exceptional. The level of co-operation during the investigation and
commitment to ensuring no customers were adversely impacted meant
it qualified for a substantial reduction in the penalty." Georgina
Philippou, acting director of enforcement and market oversight at
the FCA, said.
-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749
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