The parent company, Jardine Fleming Holdings, was formed in 1970 as a joint venture between the Jardine group, in Hong Kong, and the London- based Robert Fleming.
Jardine Fleming has acquired an international reputation as a market leader in the launch and management of Asia-Pacific funds. It is therefore not surprising that the scandal now engulfing the company took place in Hong Kong, where Colin Armstrong, a former senior fund manager and JFIM director, was involved in trading malpractice between 1993 and 1995.
Mr Armstrong, 43, was recruited by Jarding Fleming in 1982 from Scottish Equitable, the Edinburgh life company. After some years in Hong Kong, he moved for a period to Japan, before returning to the colony.
Early this year the markets in Hong Kong and London were buzzing with rumours of misconduct at Jardine Fleming, which soon had an impact on staff morale and customer confidence. They began after Jarding Fleming made a routine report of rule infringements to Imro in November 1995.
Jardine Fleming's suspicions were raised in late 1994, when it became aware that some of Mr Armstrong's trades, and his attempts at reconciliation in the back office, were dubious.
Mr Armstrong was questioned and, according to company sources, failed to give satisfactory answers to the increasingly frantic questions being asked by his employers. However, neither Jardine Fleming, nor Robert Fleming in London, which had extensive dealing with JFIM, raised the matter with their regulator, the Investment Management Regulatory Organisation, until a year after they first got wind that something was seriously amiss.
Imro contacted the Securities & Futures Commission in Hong Kong and a more detailed investigation revealed massive regulatory failures.
Mr Armstrong, operating on behalf of JFIM in Hong Kong, was only allocating deals on behalf of the company's customers after favourable price movements has made it possible for him to make a profit in his own account out of deals where gains were made before the orders were executed on behalf of the clients.
JFIM said yesterday that it was repaying the money independently of any repayment by Mr Armstrong from his own personal assets. Mr Armstrong is now back in London.