Aviva Investors slapped with FCA fine over conflicts of interest

first_imgAviva Investors has been fined £17.6m (€24m) after failing to manage conflicts of interest within its fixed income team, after evidence of ‘cherry picking’ trades for more lucrative fee arrangements was discovered in 2013.The Financial Conduct Authority (FCA) charged the asset manager after the UK watchdog found it in breach of two of its Principles for Businesses.Between 2005 and 2013, Aviva Investors, the investment arm of UK insurer Aviva, managed certain fixed income strategies side-by-side, resulting in funds that paid differing fee levels being managed by the same desk.Because a proportion of the fees were paid to traders in the fixed income team, traders were incentivised to favour one fund over another – using internal processes to delay certain trades for several hours before allocating favourable price movements to one fund, and non-favourable to others. Aviva Investors discovered two fixed income traders had been conducting the ‘cherry picking’ process in May 2013 and addressed eight impacted fixed income funds with £132m of compensation.In additional to internal compensation for the affected funds, the regulator fined the asset manager £17.6m for failing to take “reasonable care to organise and control its affairs responsibly and effectively”.FCA acting director of enforcement and market oversight Georgina Philippou said Aviva Investors’ failings were serious, but the regulator recognised the “exceptional” reaction of the manager during the investigation.Aviva Investors was offered a 30% discount on its fine by settling with the regulator in the first stage of investigation.“This case serves as an important reminder to firms of the importance of managing conflicts of interest effectively by implementing a robust control environment with effective systems to manage the risks,” Philippou added.Euan Munro, chief executive at Aviva Invetsors, said the issued within the manager had been fixed.“We have improved our systems and controls, and ensured no customers have been disadvantaged and also made substantial changes to the management team,” he added.The FCA said Aviva Invetsors had operated a ‘three lines of defence’ model of risk management, and that conflicts of interest would have been avoided had it operated effectively.“Its failure to implement robust systems and controls in this area where there were clear conflicts of interest led to an unacceptable risk these weaknesses could be exploited for personal gain,” the FCA said.The regulator did praise the manager, however, calling its response “exceptionally open and cooperative”, and said its compensation procedure to the eight affected funds was prompt.The asset managed breached Principle 3 (management and control) and Principle 8 (conflicts of interest) of the FCA’s Principles for Businesses and related Rules.Munro was announced as the asset manager’s new chief executive in July 2013 after a period of instability in the management structure. He started his new role in Janaury last year.Parent firm Aviva has emphasised a need for improving revenue from the subsidiary with its 3% contribution, described as “inadequate” by chief executive Mark Wilson.The asset manager’s prospects have been raised by Aviva’s proposed merger with fellow UK insurer Friends Life.last_img read more

UK stem cell stroke trial passes first safety test

first_imgStem cells may be able to repair the damaged areas of the brainThe world’s first clinical trial of brain stem cells to treat strokes is set to move to its next phase. An independent assessment of the first three patients to have had stem cells injected into their brain at Glasgow’s Southern General Hospital has concluded it has had no adverse effect.The assessment paves the way for the therapy to be tested on more patients to find a new treatment for stroke. The hope is that the stem cells will help to repair damaged brain tissue.The trial is being led by Prof Keith Muir of Glasgow University. He told BBC News that he was pleased with the results so far.“We need to be assured of safety before we can progress to trying to test the effects of this therapy. Because this is the first time this type of cell therapy has been used in humans, it’s vitally important that we determine that it’s safe to proceed – so at the present time we have the clearance to proceed to the next higher dose of cells.”An elderly man was the first person in the world to receive this treatment last year. Since then it has been tried out on two more patients.Global trialsThe patients have received very low doses of stem cells in trials designed to test the safety of the procedure.Over the next year, up to nine more patients will be given progressively higher doses – again primarily to assess safety – but doctors will also be using this clinical trial to assess the best ways of measuring the effectiveness of the treatment in subsequent larger trials, which would not begin for at least 18 months.Critics object as brain cells from a foetus were originally used to create the cell treatment. Michael Hunt, Chief Executive Officer of the company that produced the stem cells, Renuron, said that the technology used to grow the cells is such that no further foetal tissue will be required. There are a growing number of well-regulated clinical trials of stem cell treatments now under way in various parts of the world, including one which also began last year by the US firm Geron to develop a treatment for paralysis. The development of stem cell treatments is still at an early stage and it is likely to be many years before these treatments become widely available. According to Mr Hunt: “The earliest a treatment could be widely available if everything goes very well is five years. It is very much a case of so far, so good. It is still at a very early stage but we draw great comfort from these results.”Strokes kill about 67,000 people in the UK every year, according to the Stroke Association.The charity says it is the third most common cause of death in England and Wales after heart disease and cancer.By Pallab GhoshScience correspondent, BBC News Share Sharing is caring! Share Sharecenter_img 11 Views   no discussions Tweet HealthLifestyle UK stem cell stroke trial passes first safety test by: – September 1, 2011last_img read more