FCA Resolves Long-Running BlueCrest Conflict-of-Interest Case with $101 Million Investor Redress

The UK’s Financial Conduct Authority (FCA) has secured $101 million in redress for UK and other non-US investors affected by misconduct at BlueCrest Capital Management (UK) LLP. The FCA also imposed a public censure against the firm, concluding a multi-year enforcement case.

Between October 2011 and December 2015, BlueCrest failed to manage a significant conflict of interest arising from its dual role in managing an internal fund for employees and partners, and a flagship fund marketed to external investors.

FCA findings revealed that UK-based traders were reassigned from the external fund to the internal fund, where they conducted personal investments and stood to benefit. These changes were not adequately disclosed to investors, and in some cases, disclosures were misleading, impairing investors’ ability to make informed decisions.

The FCA concluded that BlueCrest’s failure to manage the conflict fairly resulted in sub-standard service for external fund investors.

A decision notice was published on December 22, 2021, and the FCA imposed a financial penalty of £40.8 million on BlueCrest for conflicts of interest failings.

“Asset managers are trusted to make decisions for their clients,” the FCA stated. “It is vital they have appropriate systems and controls in place to ensure conflicts of interest are managed fairly.”

The redress scheme will be administered by BlueCrest, which will contact affected investors directly or via an appointed scheme administrator.

The FCA’s recent enforcement victories also include prison sentences for Daniel Pugh and John Burford, convicted in separate million-pound investment frauds.