The internal investigation that led to the suspension of an investment director and the liquidation of investment strategies at GAM Investments began following concerns raised by an internal whistleblower.
The firm said in a statement Tuesday, in a response to recent media speculation, that it took concerns over the conduct of Tim Haywood — investment director business unit head for the unconstrained/absolute-return bond strategy — "very seriously."
"GAM fully intends to continue to provide all appropriate protections to the whistleblower," added the statement.
The firm launched its investigation in November, supported by external counsel. The whistleblower expanded on its initial concerns and contacted the U.K. financial watchdog, the Financial Conduct Authority, in March, "keeping the company informed."
The investigation uncovered and identified a number of potential misconduct issues and led to a decision to suspend Mr. Haywood July 31. Shortly after his suspension, GAM said it found Mr. Haywood may have failed to conduct or show sufficient due diligence on some investments or make accessible the internal record of documents relating to these investments; that he may have breached the firm's signatory policy, signing certain contracts alone where two signatures were required; breaching GAM's company gift and entertainment policy; and using his personal email for work purposes.
GAM then received redemption requests in excess of 10% of the relevant strategies' assets, which totaled around 7.3 billion Swiss francs ($7.5 billion); trading was then suspended and a decision was made Aug. 10 to liquidate the strategies.
"The internal disciplinary process in respect of the suspended investment director is ongoing," said the statement.
"At the heart of every modern financial services firm's systems and controls should be a culture that encourages people to come forward with concerns about colleagues' behavior," said group CEO Alexander Friedman in the statement. "The only way to maintain that culture is to protect those who are brave enough to do so and to hold accountable those found to be breaking the rules. This is central to trusted client relationships and we will never compromise on this point. I'm grateful to every one of our clients that has taken the time to understand our approach to these issues and we continue to work tirelessly in their best interests."
