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Legal & General IM accused of compliance failures

Legal and General Investment Management has come under fire from at least three whistleblowers who claim compliance failures have put its clients at risk, according to reports.

According to the Financial Times, a number of employees have submitted complaints to the FCA in recent weeks focusing on the risk culture at the $1trn (£760bn) active management arm of Legal and General, criticising senior management for failing to take action over potential issues.

Among the allegations raised are that an internal team did not flag up trading errors. One alleged error led to a large retail investment trust suffering significant losses.

Other allegations involve the miscalculation by analysts of the duration of a number of funds.

One of the complaints against the UK’s largest fund house, seen by the Financial Times, reportedly reads: “I feel obligated to report these issues now because I feel the risk culture of LGIM has become so toxic that it is reaching a crisis level. Investors in Legal & General and LGIM products, many of them UK retail investors, are having their savings and investments put at risk by the current toxic risk culture.”

The Financial Times also reports that it has seen provisional findings of an internal investigation into the retail investment trust error, which states the “error, or potential error, was not reported as required by LGIM’s errors and compensation and risk management policies”.

LGIM told the paper: “We take these issues very seriously, and in the months since these allegations were first made we have been conducting a full investigation using external advisers.

“A recent independent external review of LGIM’s culture concluded, overall, that LGIM has a positive, respectful, professional and client-focused culture. We are proud of the business we have built, but are never complacent and as a result deal seriously with any employee issues raised.”

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  1. And, having received these complaints from a number of whistle blowers, the FCA is…? Surely, comment should be sought from them?

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