UPDATE 1-UK regulator slaps $31 million fine on Invesco Perpetual

Mon Apr 28, 2014 7:48am EDT

* Co fined for exposing clients to more risk than knew about

* CEO acknowledges company had fallen short

* Says confident had mended its ways since then

* Fine would have been higher but firm settled quickly (Adds detail, company reaction)

By Chris Vellacott

LONDON, April 28 (Reuters) - Fund manager Invesco Perpetual has been fined 18.6 million pounds ($31.3 million) for exposing clients to more risk than they knew about, the latest in a series of setbacks for one of Britain's largest managers of retail funds.

In a statement on Monday, Britain's financial regulator said Invesco Perpetual had between May 2008 and November 2012 flouted rules on investment limits designed to minimise its clients' exposure to risk, resulting in them losing money.

"The extent of these losses was 5 million pounds and prompt compensation has been paid to the funds," the Financial Conduct authority (FCA) said. "These losses could, however, have been greater."

Earlier in April Invesco Perpetual - a unit of U.S.-listed Invesco Ltd - lost mandates to run 7.7 billion pounds of funds for wealth manager St James's Place, much of which is following Invesco's best-known fund manager Neil Woodford who is leaving to start a new venture.

Woodford first announced plans to leave the firm in October, widely seen in the industry as a blow for Invesco given his cult-like status among investors and ability to attract huge flows of funds.

The FCA said the company - which it said ranked as the largest retail investment manager in the UK - broke rules designed to limit risk to investors 33 times and failed to communicate clearly with clients how it was using derivatives.

The firm also incorrectly described the impact of using derivatives in documentation for investors produced in 2012 and failed to record trades on time, which meant they could have been wrongly priced, the FCA added.

In a statement, Invesco Perpetual Chief Executive Mark Armour acknowledged the company had fallen short but said he was confident it had mended its ways since then.

"We are confident that our systems and controls are now strong, effective and compliant with all applicable regulations ... In this instance, we clearly fell short of the high standards we consistently strive to deliver," Armour said.

The FCA said Invesco Perpetual had agreed to settle quickly and therefore qualified for a 30 percent discount on the fine, which would otherwise have been 26.6 million pounds. ($1 = 0.5948 British Pounds) (Editing by Huw Jones and David Holmes)

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