Watchdog fines GAM and Timothy Haywood £9.3m over Greensill scandal

Watchdog fines Swiss investment group GAM and former fund boss Timothy Haywood £9.3m over Greensill scandal

The City watchdog has fined Swiss investment group GAM and its former star fund manager a combined £9.3million over its involvement in the Greensill Capital scandal.

The Financial Conduct Authority fined GAM £9.1million, while Timothy Haywood will have to pay £230,037. Both fines were reduced by a third due to their cooperation.

Haywood, who was suspended by GAM in 2018, purchased risky debt linked to steel tycoon Sanjeev Gupta and Australian financier Lex Greensill, whose lending business collapsed earlier this year.

The Financial Conduct Authority fined GAM £9.1m, while Timothy Haywood will have to pay £230,037. Both fines were reduced by a third due to their cooperation

Greensill brokered a number of deals between Gupta and Haywood, who was ploughing hundreds of millions of pounds of clients’ money into Gupta’s endless stream of projects.

A whistleblower at GAM grew concerned about the deals, and Haywood’s closeness to Gupta and Greensill. 

After an internal investigation, the firm concluded that Haywood had failed to do enough due diligence on many of the deals and fired him.

Gupta eventually bought £600million of bonds linked to his own companies back from GAM, so the asset manager could return money to its worried investors.

The FCA said yesterday GAM failed ‘to conduct its business with due care, skill and diligence’, and that its systems to prevent conflicts of interest between itself, customers and other customers did not work effectively.

Haywood, meanwhile, failed to ensure his part of the business complied with rules around conflicts of interest.

And in a hint at the hospitality that Haywood may have been receiving from Gupta and Greensill, the FCA said he ‘failed to comply with the Gifts and Entertainment Policy of his employer’.

GAM shares tumbled after Haywood’s departure, while chief executive Alexander Friedman stepped down and clients pulled huge chunks of their money from its funds.

Friedman’s replacement as boss, Peter Sanderson, said: ‘We fully accept the findings of the FCA and acknowledge the conflicts of interest shortcomings which occurred at the firm between late 2014 and early 2018.’

He added that the firm had learned from the scandal and changed its culture.

Haywood, who originally disputed many of the findings of GAM’s original probe and claimed he had been made a ‘scapegoat’, said he was ‘truly sorry for the mistakes that I have made and I have learnt a series of very important lessons’. 

GAM said it was no longer subject to any regulatory investigations into the matter, but probes into Greensill continue.

The lending firm is being scrutinised by the FCA, while Gupta’s web of businesses and its links to Greensill are under investigation by the Serious Fraud Office.