* Unidentified employee arrested in insider dealing probe
* Over actions as private individual not employee, says Man
* Clients pulled out $2.7 billion of money in Q4
* GLG performance fees help 2012 profit top forecast
* Shares up 2 percent
By Laurence Fletcher
LONDON, Feb 28 The arrest of an employee in an
investigation into insider dealing and yet more cash withdrawals
by clients overshadowed hedge fund firm Man Group's
first results under new chief executive Manny Roman on Thursday.
Reporting an 8 percent drop in assets under management since
September to $55 billion, Man said an unidentified employee in
its GLG division was arrested by Britain's financial markets
watchdog and police on Wednesday.
The Financial Services Authority (FSA) said on Wednesday it
had arrested three fund management employees in London on
suspicion of insider dealing and market abuse. It did not name
the individuals or their employers.
Man said the investigation concerned the employee's actions
as a private individual, and not as an employee, and that
neither Man nor GLG was the subject of investigation. It added
the employee had been suspended and it was cooperating fully
with the FSA.
Regulators across the world are cracking down on market
abuse. Last month the FSA and police swooped on two men and
three women, including a trader at asset manager Schroders
, for suspected insider dealing. They were later released
In the United States, investigators are probing allegations
of insider trading at billionaire Steven Cohen's SAC Capital.
The scandal comes at an awkward time for Man, which is
trying to revive its fortunes, win back clients and turn around
the performance of its flagship fund after changing CEO.
The firm said clients pulled out $2.7 billion of money in
the final quarter of 2012, better than RBC's forecast of $3.1
billion. Withdrawals continued into 2013, although assets were
also hit by a tumble in the yen, the firm added.
However, performance fees from the GLG business helped to
push adjusted profit before tax for 2012 to $278 million,
beating analyst forecasts. A strong fund performance produced
$75 million of gross performance fees from GLG.
At 0930 GMT Man's shares, which have fallen over the past
fortnight, were up 2.1 percent at 105.2 pence.
"Business conditions remain very tough, particularly with
regard to (client) flows," Roman said on a call to journalists.
Man, whose share price is down by around two-thirds since
the start of 2011, was hit by outflows at flagship
computer-driven fund AHL, which has now shrunk to $14.4 billion.
Roman said research and development spending on AHL would be
increased, funded by cost cuts across Man.
Man has had net customer outflows in every quarter in the
last four years, apart from two quarters in the first half of
"Any investors who were expecting some sort of 'new
strategy' from the new CEO are likely to be disappointed," said
Citi analysts in a note.
Man also wrote down the goodwill on its 2010 acquisition of
GLG by a further $746 million, after $91 million last year,
roughly in line with expectations.
Earlier this month Man appointed a new head of its
struggling flagship hedge fund as part of Roman's drive to