The Financial Conduct Authority (FCA)
has secured USD 101 million in redress to UK and other non-US
investors in a fund sub-managed by BlueCrest Capital Management
(UK) LLP (BlueCrest) and imposed a public
censure.
Between October 2011 and December
2015, BlueCrest failed to manage fairly a conflict of interest
created by its role in managing both an investment fund
exclusively for the benefit of its partners and employees and a
flagship fund available to external
investors.
BlueCrest's management approved
UK-based traders being moved from the external fund to work on
the internal fund, in which they were personally invested and
where they stood to benefit personally from those
decisions.
Disclosures to investors were
insufficient and, at times, misleading. Investors were not told
that a significant number of traders were moved to work on the
internal fund. This affected investors' ability to make informed
decisions.
The firm's failure to manage fairly
the conflict led to a sub-standard service for the external fund
and its investors.
Asset managers are trusted to make
decisions for their clients. It is vital they have appropriate
systems and controls in place to ensure conflicts of interest are
managed fairly.
Therese Chambers, Joint Executive Director of Enforcement and
Market Oversight, said:
“This redress scheme brings a positive
end to a long-running case. BlueCrest put its own interest ahead
of the external fund and provided a substandard service, which
meant that investors lost out.
“After many years of legal challenge,
the FCA has now successfully secured a substantial USD 101
million for affected
investors.”
The redress scheme will be overseen by
BlueCrest. Affected investors will be contacted on next steps by
BlueCrest or a scheme administrator if it chooses to appoint
one.
Notes to
editors:
-
Final Notice 2025: BlueCrest
Capital Management (UK) LLP.
-
Redress Scheme Rules. The
redress requirement imposed by the FCA seeks to redress non-US
investors that were not eligible to be compensated by the SEC's
Fair Fund.
- On 22 December 2021, the FCA published a decision
notice against BlueCrest for conflicts of interest
failings, which BlueCrest referred to the Upper Tribunal on 22
November 2021. That Decision Notice has now been superseded by
the Final Notice above.
- On 21 June 2023, the Upper Tribunal granted BlueCrest's
application to strike out the FCA's case on redress. The Upper
Tribunal also refused permission for the FCA to introduce certain
new allegations and issues in response to arguments raised by
BlueCrest.
- On 20 July 2023, the Upper Tribunal granted permission for
the FCA and BlueCrest to appeal its decision.
- On 2 October 2024 the FCA won its case in the
Court of Appeal, which upheld the FCA's power to require
redress from firms and allowed the FCA to amend its case at the
Upper Tribunal.
- On 15 January 2025, the UK Supreme Court granted BlueCrest
permission to appeal the Court of Appeal's decision. BlueCrest's
appeal was due to be heard by the UK Supreme Court on 12 and 13
November 2025. That appeal has been withdrawn.
- On 8 December 2020, the SEC announcedLink is
external that BlueCrest Capital Management Limited,
without admitting or denying the SEC's findings, had agreed to
settle charges arising from inadequate disclosures, material
misstatements, and misleading omissions concerning its transfer
of traders between two of its funds. BlueCrest Capital Management
Limited agreed to pay disgorgement, prejudgement interest and a
penalty, which was to be returned to US investors (plus any
interest or earnings, less certain administrative costs).
- On 18 February 2022, the SEC issued its approved
planLink is external of distribution for the purpose
of establishing a Fair Fund comprising the disgorgement,
prejudgement interest and penalty which BlueCrest Capital
Management Limited had agreed to pay to compensate US investors
for management fees paid in connection with investments in
BlueCrest Capital International Master Fund Limited's two
unregistered feeder funds, BlueCrest Capital International
Limited and BlueCrest Capital L.P., between 1 October 2011 and
31 December 2015.
- The FCA would like to thank the SEC for their assistance in
this matter.
- The redress scheme covers UK and other non-US Investors,
meaning any person, or their lawful successor, who held shares,
units and/or an interest in the external fund during the relevant
period 1 October 2011 to 31 December 2015, excluding any person
who was covered by the SEC's redress scheme and other investors
such as certain BlueCrest Executives.
- The FCA's Principles for
Businesses.
