The FCA said the UK-headquartered asset manager broke rules designed to limit investors’ exposure to risk on more than 33 occasions, with these breaches occurring across more than 15 of Invesco’s funds, accounting for more than 70% of the firms’ total £47bn in assets under management.
These failings took place between May 2008 and November 2012, and led to losses of around £5m, although the FCA said these losses could have been greater.
The FCA also said Invesco failed to communicate “clearly or fairly with its investors” because it failed to disclose the use of derivatives in the relevant fund’s prospectuses and incorrectly described the impact of using derivatives in key investor information documents produced in 2012.
Invesco was also found to have failed to record trades on time and monitor whether trades were allocated fairly between funds.
Issuing the £18,643,000 fine, Tracey McDermott, FCA director of enforcement and financial crime, said: “Investors of all sizes trusted Invesco Perpetual to manage their money. They signed up for a certain level of risk but we found Invesco Perpetual’s actions were at odds with investors’ reasonable expectations.”
Because Invesco agreed to settle the fine at an early stage, the FCA said it qualified for a 30% discount. Without this, the fine would have been £26,632,900.
In response, Invesco said that losses arising from these breaches were promptly reimbursed to the funds involved.
Acknowledging the company’s failings, chief executive Mark Armour said: “In this instance, we clearly fell short of the high standards we consistently strive to deliver.”
In a statement, Invesco also made a number of points reacting to the fine and the regulator’s findings.
- Disclosures concerning the use of, and risks associated with, derivatives were outlined within the relevant ICVC Prospectus; however, those disclosures were not made within the Simplified Prospectuses and were inadequately disclosed within the Key Investor Information Documents (KIIDs).
The firm has said: The disclosure was rectified within the KIIDs for the two impacted funds in August 2012.
- Invesco Perpetual did not adequately document allocations of fixed income securities when aggregating client orders for UK ICVCs.
The firm has said: A review by Invesco Perpetual determined that there was no evidence that this impacted investors.
- Certain UK ICVC fixed income transactions were not posted on a timely basis.
The firm has said: This issue did not result in a requirement to re-price the funds.