Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

GAM: bond star broke inducement and dealing rules

GAM: bond star broke inducement and dealing rules

GAM’s scandal-hit absolute return bond head Tim Haywood failed to conduct sufficient due diligence on some investments and breached company policy on gifts and entertainment, according to the findings of the firm’s internal investigation.

GAM said that Haywood, who oversees £8.5 billion, breached its signatory policy by signing off on contracts alone, where two signatures were necessary.

He is also said to have breached the company's gifts and entertainment policy by not asking for pre-approval and using his personal email for work purposes.

In an update to its clients today, the Swiss asset manager concluded in its investigation that Haywood (pictured) failed 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’.

The firm said its ‘thorough investigation’ into Haywood’s conduct is ‘largely completed’, with the firm now moving on to following its internal disciplinary procedures.

The update followed a Times report this morning that traders at GAM contacted investment banks and institutions in an attempt to unwind positions ahead of Haywood's suspension.

An investment bank trader who requested anonymity told the paper that his company had been contacted by staff at GAM late last month, asking it to bid for assets being sold by the funds.

The trader said: ‘I got messages like, "Can you bid on this bond for a fund liquidating?". I saw loads of messages from GAM traders about a fund liquidating.’

Another trader told the newspaper that GAM had approached financial institutions in an attempt to sell assets from its absolute return bond funds.

The FT reported today that in its review, GAM learned that some of Haywood’s portfolio investments were in ‘illiquid debt securities’ that ‘had not been subject to proper due diligence and risk control reports’.

The firm said it has ceased charging any management fees on the funds while they remain suspended, and is considering liquidating the funds, though no decision has been made public.

Jack Flaherty and Alex McKnight have assumed joint responsibility for the GAM Multibond – Absolute Return fund and associated portfolios.

Citywire+ rated Daniel Sheard, who had co-run the absolute return strategies, is now not involved in the day-to-day running of the fund and continues to run other fixed income portfolios.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Jack Flaherty
Jack Flaherty
51/95 in Bonds - Global High Yield (Performance over 1 year) Average Total Return: 1.29%
Daniel Sheard
Daniel Sheard
Timothy Haywood
Timothy Haywood
Citywire TV
Play Citywire 20: Investec's du Toit on managing the 'jerk factor'

Citywire 20: Investec's du Toit on managing the 'jerk factor'

Investec boss Hendrik du Toit believes he has become far more decisive over the last 20 years, especially when it comes to managing 'jerk' factor.

Play Citywire 20: Hugh Young's bleak lesson

Citywire 20: Hugh Young's bleak lesson

In the latest video to mark Citywire's 20th birthday, Aberdeen Standard Investments Asia head reminisces about one of the toughest periods in his career.

Play IWD 2019 video: fund and wealth figures define diversity

IWD 2019 video: fund and wealth figures define diversity

To mark International Women's Day, we have spoken to a variety of top fund houses and wealth managers about their definition of diversity, and how they hope to achieve a more inclusive workplace.

Read More
Wealth Manager on Twitter