Firms wait for Gartmore details
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Advisers are calling for more details about the US Securities and Exchange Commission investigation into Gartmore to be made public, with Bestinvest not recommending any new investments into Gartmore funds until this happens.
In a tumultuous week for Gartmore, leading manager Guillaume Rambourg was suspended last Tuesday for an alleged breach of internal dealing rules. It was also revealed that Rambourg was previously fined by the Italian regulator for front-running a broker note in 2006. Insight and Aberdeen are two of the bigger multi-manager firms to have already taken their holdings out of the Gartmore European absolute return following the suspension. Old Broad Street Research confirmed that it has suspended the fund’s A rating prior to the completion of Gartmore’s internal investigation.
Hargreaves Lansdown has removed the European absolute return fund from its wealth 150 until further details emerge on Rambourg’s suspension.
Details of the SEC inquiry were buried in the firm’s own prospectus from last December which said the firm was “fully co-operating with the SEC” and if enforcement action is taken, it may be required to make financial payments estimated at between £1.2m and £1.3m.
Gartmore has insisted that neither its suspended European absolute return fund manager Rambourg nor co-manager Roger Guy is involved in the US inquiry.
Bestinvest senior investment adviser Adrian Lowcock says: “The situation is uncertain. For now, we would say existing investors should stay put but we would not recommend going in to a fund until more information on the SEC investigation is unveiled, which may take time.”
Hargreaves Lansdown senior investment manager Ben Yearsley says: “We need to see what will happen. We obviously would like to see more information regarding the reasons behind the SEC investigation.”
Chelsea Financial Services managing director Darius McDermott says: “From an IFA’s perspective, it is good that Gartmore is taking an internal breach so seriously.”
A spokeswomen for Gartmore says the company is unable to release more details on the SEC investigation.Gartmore shares fell by 19 per cent last week following the suspension at the close of trading. The firm’s share price rallied on Tuesday this week to end at around 151p.
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