The FCA has publicly censured a large alternative asset manager for serious conflicts of interest failures, resulting in a $101 million redress to non-U.S. investors.
This case is a stark reminder for alternative asset managers of the risks posed by ineffective conflict management, especially when internal and external funds operate side-by-side. It highlights the importance of independent governance, transparent disclosures, and proactive compliance oversight.
FCA Findings
Between October 2011 and December 2015, the firm allegedly reallocated portfolio managers from its external fund (open to professional investors) to its internal fund (restricted to partners and employees). Senior decision-makers heavily invested in the internal fund stood to benefit personally from these reallocations, creating a conflict that was neither properly recognised nor addressed.
To compensate for the loss of talent in the external fund, the firm deployed a semi-automated trading system called Rates Management Trading (RMT), which consistently underperformed and was eventually withdrawn after losses.
The firm failed to disclose the existence of the internal fund until media coverage in 2014, and even then, only provided limited, reactive information. Incomplete statements and generic conflict disclosures left investors without the clarity needed to assess the situation. Many redeemed their investments, and the firm ultimately closed its business to new external investment.
The FCA’s findings revealed governance failures, inadequate monitoring, and a lack of transparency, culminating in reputational damage and significant financial consequences.
Take Control of Your Conflict Management Framework
Alternative asset managers should take immediate steps to strengthen their approach to conflicts of interest:
- Conduct a comprehensive conflicts review: Map all potential and actual conflicts across your funds. Assess whether controls are truly effective and ensure senior management independence.
- Enhance disclosure practices: Review investor communications for clarity and completeness. Align due diligence questionnaires, prospectuses, and marketing materials.
- Strengthen governance: Introduce independent oversight of allocation decisions and empower compliance to challenge conflicts.
- Implement robust monitoring: Track fair treatment across investor groups and report regularly to boards. Maintain audit trails for key decisions.
- Proactively engage with regulators: Ensure all attestations are backed by evidence. Consider voluntary remediation, where needed.
Demonstrate Governance, Not Just Disclosure
This case reinforces that disclosure alone is insufficient. Firms must show they have robust, independent governance and transparent decision-making processes in place. “Tick-box compliance” won’t protect against enforcement action or reputational damage.
Working with a specialist provider that combines regulatory insight and scalable tools helps firms build conflict frameworks that are practical, defensible, and regulator-ready.
Want to learn more? Tune into our webcast, Conflicts of interest under the FCA Microscope, on 25 November 2025.
Strengthen Your Conflict Management with ACA’s End-To-End Support
ACA offers a comprehensive suite of solutions to help firms identify, manage, and remediate conflicts of interest across their operations:
- Market Abuse Risk Framework: ACA’s proprietary framework maps market abuse risks across asset classes and trading strategies. It includes surveillance system reviews, STOR procedures, and guidance on maintaining regulator-ready documentation.
- Regulatory Technology: Through our ComplianceAlpha® platform, firms can automate conflict tracking, monitor political contributions, and integrate surveillance across trade and eComms. The platform supports real-time alerts, audit trails, and reporting to boards and regulators.
- Advisory Services: Our team of former regulators and industry practitioners provides expert-led reviews of governance frameworks, conflict registers, and allocation policies. We help firms assess independence, document oversight, and align practices with regulatory expectations.
Ready to move beyond health checks? Get in touch to explore practical tools and expert insight that support fair treatment, independent governance, and proactive conflict management.