Former BlueBay Hedge Fund Manager Fined, Barred

Feb 3 2010 | 12:57pm ET

A former hedge fund manager has been barred by British regulators for falsifying his fund’s valuation.

Simon Treacher, who managed the US$1.2 billion Emerging Market Total Return Fund at BlueBay Asset Management, was also fined £140,000 for mismarking funds. According to the Financial Services Authority, Treacher cut-and-pasted bogus figures into seven broker quotes in 2007, inflating the fund’s valuation by some US$27 million. The altered valuations were then used to support Treacher’s mismarked positions, the FSA said.

The shenanigans cost BlueBay investors about US$650,000; the hedge fund, which was cleared of any wrongdoing by the regulator, has made those investors whole.

“His conduct, both in mismarking the funds and his dealings with us at the regulator, lacked integrity,” FSA enforcement chief Margaret Cole said. “Treacher’s actions undermined BlueBay’s independent valuation process and disadvantaged investors in the affected funds.”

Despite her harsh words for Treacher, the FSA cut his fine from £200,000 after he began cooperating with the regulator. Initially, the FSA said, Treacher offered “misleading answers” during its probe.

Treacher resigned from BlueBay in December 2008 after the London-based firm found he violated its internal valuation policy. The firm referred the case to the FSA, and said that its decision to close Treacher’s fund had nothing to do with his alleged malfeasance.

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