FSA bans hedge fund manager and issues £35,000 fine

The FSA has banned a hedge fund manager and fined him £35,000 for mismarking trading positions to hide losses.

Loic Albert Antoine Montserret - a former portfolio manager at BlueCrest Capital Management Limited (BlueCrest) - was found to have deliberately mismarked his positions in an attempt to avoid losing his job over losses he was making on his trading book.

This is the first time the FSA has both banned and fined an individual for mismarking trading positions.

From November 2007 to May 2008, Montserret was responsible for managing $60m of the capital in the BlueCrest Multi Strategy Credit Fund. During April 2008, changing market conditions resulted in a significant fall in the value of Montserret's trading book which he knew would put his job at risk. To disguise the extent of his losses, Montserret mismarked four equity index options by valuing them at nearly two to three times their actual market price.

The regulator said the mismarking went on for ten days and resulted, at its maximum, in the fund being overvalued by $8.6m. On the tenth day, he admitted the overvaluation to the head of his trading desk. "Market professionals cannot resort to mismarking whatever the circumstances," says Margaret Cole, director of enforcement at the FSA.

"Mr Montserret's behaviour fell short of the standards expected from approved persons and showed a lack of integrity and honesty on his part."

Cole adds: "It is important that investors can trust market professionals to always do their job appropriately and fairly. Our tough action in this case should serve as a deterrent to others who might damage market confidence by acting in a similar manner."

The FSA took into account that Montserret admitted his misconduct at an early stage of its investigation. He also qualified for a 30% discount on the fine by agreeing to settle early.

IFAonline