Gartmore suspends top fund manager

Date: Wednesday, March 31, 2010
Author: Reuters

UK fund firm Gartmore (GRTR.L) suspended a top fund manager on Tuesday as it probed a breach of internal procedures, sending shares plunging to almost half the level at its initial public offering three months ago.

In a statement, Gartmore said Guillaume Rambourg, a close colleague of Gartmore's most high-profile fund manager Roger Guy, was suspended pending the outcome of an internal investigation into whether he had been "directing trades".

Gartmore declined to say officially what "directing trades" referred to, but a company source said the probe had related to favouring certain brokers when carrying out dealings.

The source also said there was no timeframe for an end to the investigation, and that no other Gartmore fund managers were under scrutiny.

The news raised the prospect of redemptions from concerned clients, and Gartmore shares slumped by more than 30 percent to close at 116 pence. The stock had listed at 220 pence in December.

The source said Gartmore had already fielded several calls from investors since the news broke, and was contacting key clients itself.

Gartmore's actively-traded hedge funds could generate tens of millions of dollars in commission, making them one of the top hedge fund clients in London for brokers.

A source close to the FSA confirmed that the suspension of Rambourg was not connected to the joint investigation on insider dealing launched by the Financial Services Authority and the Serious Organised Crime Agency.

The FSA last week arrested seven men as part of a clampdown on insider trading, sending shock waves through London's financial district. [ID:nLDE62O1ZG]

A source close to Gartmore said the timing of the suspension was "a completely hideous coincidence".

"Gartmore has not identified any information to date which suggests that Gartmore's clients have suffered any loss as a result of these breaches," Gartmore said in the statement.

Guy and Rambourg lead the European investment team which includes mainstream long-only funds and hedge funds. As of end-December the team managed more than 4.5 billion pounds ($6.01 billion) in assets for Gartmore, equating to about 37 percent of the firm's total assets.

The group struggled to push through an IPO in December last year as investors fretted over the so-called 'key-man risk' derived from Roger Guy's high profile at the firm. The reliance on Guy and Rambourg was lessened by the arrival of John Bennet from GAM to run European long-only funds.

Rambourg has been at Gartmore for 14 years.

Mark Dampier, head of research at financial advisor Hargreaves Lansdown, said he was not planning to advise investors to sell Rambourg's funds.

"Gartmore says no clients are affected. Roger Guy is still the lead manager, he's still number one. Until Gartmore can furnish a bit more information ... I wasn't planning to do anything ... The money's ring-fenced," he told Reuters.

Neither Guy or Rambourg could be reached for comment.