A BlueBay Asset Management plc (BlueBay) hedge fund manager has been banned and fined £140,000 for mis-marking funds he managed.

Simon Treacher, a hedge fund manager in BlueBay's Emerging Markets team, cut out and pasted different figures onto seven original broker quotes used in the valuation process of assets in the funds he managed, deliberately altering quotes. This, the Financial Services Authority (FSA) said, led to an uplift in the independent valuation of the funds of around $27 million over three months, from August to October 2008. Investors were therefore financially disadvantaged by approximately $650,000, and BlueBay has fully compensated them for this.

The FSA said he also mislead the regulatory body during the investigation.

"Our actions in banning Simon Treacher and imposing a significant fine will send a powerful message of deterrence to others who might be tempted to behave in this way," commented Margaret Cole, FSA director of enforcement and financial crime. "His conduct, both in mis-marking the funds and his dealings with us as the regulator, lacked integrity. Treacher's actions undermined BlueBay's independent valuation process and disadvantaged investors in the affected funds. By making effective use of our powers to prohibit and fine individuals who are not fit and proper to carry out regulated activities, we help achieve our regulatory objectives of maintaining market confidence and protecting consumers."

The FSA added that it makes no criticism of BlueBay in connection with the investigation, and Treacher is no longer employed at the firm. He settled at an early stage of the investigation, qualifying for a 30 per cent discount on the financial penalty, which would otherwise have been £200,000.

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