In another recent example of enforcement action by the Financial Conduct Authority (FCA), a company that was found to have exposed investors to greater levels of risk than they had been led to expect has been fined £18,643,000. The fines relate to the company’s activities between May 2008 and November 2012.
During that period Invesco Perpetual, which includes Invesco Asset Management Limited and Invesco Fund Managers Limited, apparently failed to comply with investment limits that are designed to protect consumers by limiting their exposure to risk.
The extent of the losses amounted to £5 million and compensation was quickly paid to the funds but, according to the FCA, these losses could have been much greater.
In addition, the firm did not clearly inform investors or explain the risks associated with its use of derivatives that introduced leverage into the funds, although the firm was allowed to use derivatives in this way.
Invesco Perpetual agreed to settle at an early stage, and therefore qualified for a 30% discount to its fine. Without this, the fine would have been substantially higher, at £26,632,900.
"As a forward looking regulator the FCA takes action where we see risks to consumers, not just after they suffer losses,” commented an FCA spokesperson. “In this case, investors of all sizes trusted Invesco Perpetual to manage their money. They signed up for a certain level of risk but we found Invesco Perpetual’s actions were at odds with investors’ reasonable expectations."
FCA investigations and prosecutions can affect both businesses and individuals, and expert legal advice is essential. The FCA defence solicitors at Lewis Nedas draw upon our regulatory, compliance, white collar crime and serious crime skills, and our genuinely successful track records when tackling both regulatory and criminal investigations and/or proceedings.
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