Sector developments and company hires

Decision notice issued against BlueCrest
The UK FCA has published a decision notice against BlueCrest Capital Management (UK) (BCMUK) setting out its decision to impose a financial penalty of £40.81m on the firm. BCMUK has elected to refer the case directly to the Upper Tribunal, which will determine the appropriate action, if any, for the FCA to take.

The FCA considers that between 1 October 2011 and 31 December 2015, BCMUK failed to manage fairly a conflict of interest created by allocating portfolio managers working on an external fund, open to investors outside BlueCrest, to an internal fund, open only to its partners and employees. The FCA found that BCMUK’s systems and controls did not manage the risk that portfolio managers could be allocated in a way that favoured investors in the internal fund over those of the external fund. This resulted in a sub-standard investment management service being provided to the external fund and its investors, according to the authority. 

The findings in the decision notice are provisional and only reflect the FCA’s views at this stage, since BCMUK has yet to make representations. The FCA has also decided to impose a requirement on BCMUK to pay redress to clients that have suffered loss as a result of its failings. This decision has also been referred by BCMUK to the Tribunal for determination.

BlueCrest Capital Management last year agreed to settle US SEC charges arising from inadequate disclosures, materials misstatements and misleading omissions concerning its transfer of traders between two of its funds (SCI 9 December 2020), without admitting or denying the SEC's findings. The SEC last month issued its proposed plan of distribution to compensate US investors for management fees paid in connection with investments in BlueCrest Capital International Master Fund’s two unregistered feeder funds - BlueCrest Capital International and BlueCrest Capital - between 1 October 2011 and 31 December 2015. 

Global
Cadwalader has elected nine attorneys to the firm’s partnership, effective 1 January 2022. In addition, the firm has promoted 23 attorneys to special counsel and counsel.

Four of the firm’s new partners have securitisation experience: in London, Sabah Nawaz focuses on CMBS, CRE CLOs and CRE warehouse financings; in Washington, DC, Adam Risell and Taylor Speers focus on middle market CLOs and MSR securitisations respectively; and in Charlotte, Kevin Sholette focuses on real estate finance and securitisation. Three of the new special counsel (Douglas Arborio and Skyler Walker in Charlotte and Kate Forman in New York) and three of the new counsel (Dante Amenta in New York, Avis Edwards in Charlotte and Emma Gallagher in London) also practice in the securitisation space.