FCA Secures $101 Million Redress for BlueCrest Investors After Long Conflict of Interest Case

FCA Secures $101 Million Redress for BlueCrest Investors After Long Conflict of Interest Case

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Key Takeaways

  • Conflict of Interest Breach: BlueCrest failed to manage a conflict arising from its management of both internal and external funds, prioritizing employee-owned interests over external investors.
  • $101 Million Redress: The FCA secured US$101 million in compensation for UK and other non-U.S. investors affected between 2011 and 2015.
  • Misleading Disclosures: Investors were not told that key traders were moved from the external fund to the internal one, impairing their ability to make informed decisions.
  • Regulatory Resolution: The FCA’s authority to require redress was upheld by the Court of Appeal in 2024, ending a years-long legal dispute after BlueCrest withdrew its Supreme Court appeal.
  • Cross-Border Cooperation: The SEC previously obtained compensation for U.S. investors through its own Fair Fund, demonstrating international regulatory alignment.
Deep Dive

The UK’s Financial Conduct Authority (FCA) has secured $101 million in redress for UK and other non-U.S. investors in a fund sub-managed by BlueCrest Capital Management, concluding a years-long legal battle over the firm’s mishandling of conflicts of interest.

Between October 2011 and December 2015, BlueCrest failed to manage fairly a conflict arising from its dual role managing both an internal investment fund—reserved for partners and employees and a flagship external fund open to outside investors.

According to the FCA, traders were moved from the external fund to the internal fund, where they had personal stakes and stood to gain financially. These transfers, coupled with inadequate and sometimes misleading disclosures, meant that investors were not fully informed about how BlueCrest was reallocating its talent and focus. As a result, the external fund delivered a substandard service to its investors, while internal funds benefitted disproportionately.

“This redress scheme brings a positive end to a long-running case,” said Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA. “BlueCrest put its own interest ahead of the external fund and provided a substandard service, which meant that investors lost out. After many years of legal challenge, the FCA has now successfully secured a substantial $101 million for affected investors.”

The public censure marks the end of a prolonged legal saga that tested the FCA’s powers to require redress from firms. BlueCrest had referred the FCA’s 2021 decision notice to the Upper Tribunal, which initially struck out parts of the case in 2023. However, in October 2024, the Court of Appeal upheld the FCA’s authority to demand redress and allowed it to amend its case. BlueCrest’s planned appeal to the UK Supreme Court, scheduled for November 2025, was ultimately withdrawn, paving the way for the final resolution announced this week.

The redress scheme will be overseen by BlueCrest, with affected investors contacted directly by the firm or a scheme administrator if appointed. The FCA noted that the scheme applies to UK and other non-U.S. investors who held shares, units, or interests in the external fund during the relevant period, excluding individuals covered by the U.S. Securities and Exchange Commission’s (SEC) Fair Fund.

The SEC had previously announced, in December 2020, that BlueCrest Capital Management Limited had agreed to settle charges over inadequate disclosures and misleading omissions related to its trader transfers, paying disgorgement, interest, and a penalty to compensate U.S. investors through the Fair Fund.

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