Hedge fund manager is banned and fined by FSA

Date: Thursday, February 4, 2010
Author: James Moore, The Independent

A millionaire hedge fund manager was yesterday thrown out of the City for massaging his performance figures.

Simon Treacher, an emerging markets specialist who helped run a £900m fund for BlueBay Asset Management, was also fined £140,000 for his transgressions, which at one point inflated the value of his fund by $11.8m.

But the Financial Services Authority's ban, which leaves his career in ruins, stands as by far the biggest penalty, depriving him of the huge earnings commonplace among Mayfair's hedge fund community.

Mr Treacher admitted concocting a "cut and paste" scheme to artificially boost the value of his fund. He altered seven documents used in support of the month-end valuation for specific assets by printing legitimate broker quotes valuing them, but carefully cutting out and pasting different figures on to the relevant valuation lines, copying the altered document, and then submitting the altered copied version as the original quote.

The total valuation errors in July, August and September 2008 amounted to $27m as a result of the scheme.

The FSA said Mr Treacher's actions resulted in investors being financially disadvantaged by approximately $650,000 for which BlueBay has fully compensated them.

The watchdog further said that after being alerted to the issues by BlueBay, Mr Treacher "then provided misleading information to the FSA about his conduct during its investigation".

The FSA made no criticism of BlueBay and Mr Treacher – who ultimately settled the case early and will not appeal – no longer works at the firm.

Margaret Cole, FSA director of enforcement and financial crime, said: "Our actions in banning Simon Treacher and imposing a significant fine will send a powerful message of deterrence to others who might be tempted to behave in this way. His conduct, both in mis-marking the funds and his dealings with us as the regulator, lacked integrity. Treacher's actions undermined BlueBay's independent valuation process and disadvantaged investors in the affected funds."