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Compliance & Regulation

GAM Accused of accounting mismanagement, announces change in senior management

GAM Holding AG has been accused of accounting mismanagement by the Swiss exchange. Simultaneously, the money manager has announced the decision by Matthew Beesley to leave the firm.

GAM Holding AG has been accused of accounting mismanagement by the Swiss exchange. Simultaneously, the money manager has announced the decision by Matthew Beesley to leave the firm.

GAM has been accused of accounting misstatements connected to its 2016 acquisition Cantab Capital, a UK hedge fund firm, by the SIX Exchange’s regulation body.

The the Swiss listing authority had announced the submission of a sanction proposal to its Sanctions Commission in relation to a technical accounting matter at GAM relating to the recognition of future performance fee payments as a financial liability following GAM’s acquisition of Cantab Capital.

When GAM acquired Cantab, 40% of all future performance fees were retained by Cantab’s previous partners. SIX argue that this arrangement gave rise to a financial liability, which should have been measured at fair value and recognised as a financial liability at the time of the acquisition and subsequently re-measured each year, with any changes in value being recognised in GAM’s consolidated income statement, according to a statement by GAM.

GAM’s position, supported by its external auditors and an independent expert, is that no financial liability should be recognised until performance fees crystallise, at which point any liability to pay those fees is recognised and reflected in its consolidated financial statements along with a matching performance fee asset. GAM believes that this reflects a true and fair view of its financial position reported to shareholders and does not result in an income and expense mismatch, as published in a statement by the firm.

In the event GAM is unsuccessful in defending its position, GAM would be required in its next consolidated financial statements to recognise the financial liability at fair value and restate any impacted historical comparative amounts.

(GAM)’s Group Management Board.

GAM has also announced the departure of Matthew Beesley. In 2018, Beesley was appointed to GAM Holding AG,

Due to Beesley’s work successfully restructuring the team, his role as group head of investments will not be replaced. His business management duties will be assumed by the respective heads of the two investment groups: Systematic and Solutions (includes Private Client); and Discretionary.

His responsibilities for front office controls and trading will fall under the remit of Steve Rafferty, Group COO. Beesley will continue to work over the coming months to ensure a smooth transition of his responsibilities.