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Cash for CEOs: fund firms may face multi-million pound fines
by Dylan Lobo on Mar 05, 2013 at 07:43
The Financial Services Authority (FSA) is set to crackdown on fund firms using clients’ cash to pay for access to chief executives, according to the Financial Times.
The news comes after the paper revealed investment banks were charging up to $20,000 (£13,000) an hour to access the chief executives of their corporate clients. While it claimed the practice was most prevalent among hedge funds, it also indicated mainstream asset managers may be guilty.
The watchdog’s head of asset management and supervision Ed Harley said it was ‘hard to justify’ the use of client commissions after analysis of 15 asset managers. He warned, in an interview with the FT, that these firms could be hit with multimillion pound fines if it is proved they have broken the rules.
‘There is an awful lot of clients’ money being used here and it has to be used properly,’ Harley is reported to have said.
He added: ‘When we challenged firms as to how they can justify [payments for corporate access] they couldn’t give us a coherent answer that met those criteria.’
Investment Management Association chief executive Daniel Godfrey indicated this was a grey area in an interview yesterday.
'A rudimentary straw poll of corporate communications advisers and chief executives indicated that many of them weren't aware that investors and potential investors were paying to see them,' he said.
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