UK – The UK Financial Conduct Authority (FCA) has fined Aberdeen Asset Managers and Aberdeen Fund Managers £7.2m (€8.5m) after the firms left a daily average of £685m of institutional client money unprotected over a three-year period.
Aberdeen failed to indentify, and therefore properly protect, client money it placed in money market deposits (MMDs) with third-party banks between September 2008 and August 2011, the UK authority said in a statement.
A daily average of £685m a day – consisting of the uninvested cash from institutional clients' portfolios – was affected by the failure, it said.
"Aberdeen breached the FCA's principles for businesses, which require firms to protect client assets and organise and control their affairs effectively," it said.
It said this left the firm's clients at risk of delays in having their money returned if Aberdeen became insolvent.
"Had debts been owed by Aberdeen to the third-party banks providing the MMDs, client money could also have been at risk of set-off," it added.
According to the watchdog, Aberdeen wrongly decided the client money was not subject to FCA rules, which meant it got the wrong documentation from banks when setting up the accounts.
Aberdeen also used "inconsistent naming conventions" when setting up the accounts, creating uncertainty over who owned the funds.
However, Aberdeen said none of its clients suffered any loss as a result of the breaches, and that client funds were never been mixed with the company's own money.
"Nor was there any risk of any client money being lost as a result of set-off, as the company did not have any borrowings with any of the relevant banks," it said.
But it admitted there had been a risk clients could have faced a delay in getting their money back had the company become insolvent.
"The company regrets the situation arose, has co-operated fully with the FCA in the course of its investigation and has amended its UK procedures regarding bank deposits following the FCA's guidance," Aberdeen said.
Because the firm cooperated fully with the investigation and agreed to settle at an early stage, the FCA said it had discounted the full £10.3m fine by 30%.
It also noted that Aberdeen had itself reported the matter to the FCA.