Whistleblower tipped off GAM to director's behavior

[September 25, 2018]  ZURICH (Reuters) - GAM Holding said its decision to suspend a director in charge of absolute return bond funds in July, which triggered an investor exodus and a sharp fall in the company's shares at the time, was prompted by a tip from an internal whistleblower.

GAM, which said on Tuesday no other staff were under investigation, said director Tim Haywood's potential conduct issues related to failure to conduct sufficient due diligence and failure to make accessible some internal records.

"Additionally, the investigation concluded that Mr Haywood may have breached the company's signatory policy and may have used his personal email for work purposes. He also breached the company's gifts and entertainment policy," the Swiss group said in a statement.

There was no immediate comment from Haywood.

GAM said it took the unidentified whistleblower's information very seriously whilst ensuring that it protected the person's identity and the fact that the person had come forward.

"In November 2017, an internal investigation, supported by independent external counsel, was launched. In March 2018, the whistleblower expanded on the initial concerns and contacted the FCA whilst keeping the company informed," it said.

GAM has begun liquidating nine funds whose trading it halted in July after suspending Haywood. The funds represented 7.3 billion Swiss francs ($7.5 billion) in assets under management at the end of July.

"The liquidation of the ARBF funds which ensures that all investors are treated equally and fairly is continuing, with between 60 percent and 87 percent of the funds returned to date," it said.

The second liquidation payments will start this week as it converts more fund assets to cash and returns money to investors "over the following months, dependent on market conditions".

"No material client detriment has been identified to date and we continue to keep this under review," it added.

GAM shares, which had traded as high as 18.18 francs in January, closed at 7.445 francs on Monday

(Reporting by Michael Shields; Editing by John Miller/Keith Weir)

[© 2018 Thomson Reuters. All rights reserved.]

Copyright 2018 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.