New York – Just over two weeks ago, Integrity wrote about a story concerning the Gartmore Group and one of their fund managers, Guillaume Rambourg, who had been suspended pending an investigation into whether or not the manager directed trades towards favored brokers. Now, a little less than one month after having suspended Rambourg, Gartmore has brought him back to work as an investment analyst and their head of compliance, Gerry Harvey, left the firm two or three weeks ago. Gartmore says the departure was not linked to the investigation, but details are scarce.
The particulars of the initial story (which Integrity outlined in full here) were somewhat less than transparent as well, however the basic concern was that Rambourg directed traders to use specific brokers that he favored to execute securities transactions. Gartmore did not believe that clients suffered any losses as a result of the alleged breaches and the investigation was not related to the FSA’s recent inquiries into alleged insider trading. A number of London-based brokers were less than surprised at the time of the suspension, feeling that this type of behavior was typical and that the decision of who to trade with is almost always extremely subjective, and open to potential abuse.
Rambourg, who Gartmore feels will help bring benefit to its clients and investors, has recently been reinstated as an investment analyst and will likely return to his previous role pending approval from the FSA. The approval would allow Rambourg to return to handling client funds and according to the CEO of Gartmore, Jeff Meyer, may take “a few months, not days”.
The wrinkle in the story comes in the news that the firm’s chief compliance officer, Gerry Harvey, left the firm about two or three weeks ago. Details on why Harvey left the firm are scarce, however the CFO of Gartmore, Keith Starling, did say that Harvey’s departure was not linked to the investigation. Another analyst who covers Gartmore, Katrina Hart of Canaccord Adams, isn’t quite ready to change her sell recommendation on the stock, feeling that more transparency and clarity is needed on the details surrounding the whole affair.
When the story initially broke, Integrity surmised that many in the financial services industry would pay close attention to this story for a variety of reasons. From learning what is within bounds for fund managers to learning how to appropriately gain the big business brokers are looking for, the story may well help to set precedents for future behavior.
Perhaps the most interesting quote in the story comes from Rambourg’s fellow fund manager at Gartmore, Roger Guy, who, according to a recent article, blamed “‘excessive’ compliance rules introduced when Gartmore went public in December for Rambourg’s suspension”. The statement would seem to at least imply that Guy sees little wrong with his co-worker’s actions, something which may be backed up by Gartmore’s finding that Rambourg only violated internal policy. What the FSA thinks remains to be seen.