Aviva Investors, the asset management business of Aviva plc, has been hit with a £17.6 million fine by the Financial Conduct Authority (FCA) for failing to implement proper risk management and control systems.
The FCA found that between June 2008 and May 2013, Aviva Investors implemented a management strategy on areas of its fixed income desks where funds that paid differing levels of performance fees were managed by the same desk, resulting in "conflicts of interest not being managed fairly".
The asset management business found that in May 2013, two former fixed income traders were found to have delayed recording executed trades by several hours, thereby benefiting from intraday price movements, a practice referred to as "cherry picking".
Aviva Investors, which manages approximately £240 billion in assets, has already reached a settlement with the regulator in "an exceptionally open and cooperative manner" and has made compensation payments of £132 million to the eight impacted funds.
"Ensuring that conflicts of interest are properly managed is central to the relationship of trust that must exist between asset managers and their customers. It is also a fundamental regulatory requirement," says Georgina Philippou, acting director of enforcement and market oversight at the FCA. "While Aviva Investors' failings were serious, the FCA has recognized that its actions since reporting its failings were exceptional."
"We fully accept the conclusions of this investigation," said Euan Munro, chief executive officer of Aviva Investors, in a statement. "We have fixed the issues, improved our systems and controls, and ensured no customers have been disadvantaged."
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