Invesco fined by watchdog over asset mismanagement: Investment manager that handled Maxwell funds to pay pounds 2.3m

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The Independent Online
INVESCO MIM, the investment management group, was fined pounds 750,000 yesterday by Imro, the City watchdog, over its mishandling of assets belonging to the Mirror Group pension scheme and other client accounts.

Imro also made Invesco pay costs totalling pounds 1,589,835 for the 18-month investigation.

Invesco had also been forced to spend around pounds 2m during the investigation on restructuring and top management changes, prompted by pressure from Imro and the Securities and Investments Board, the senior financial services watchdog.

Invesco admitted 55 charges, three involving Mirror Group, where the regulator said Invesco failed to keep it 'regularly, promptly and fully informed of its concerns about the way in which pension scheme assets under its management were being used'.

Invesco also admitted parting with share certificates without instructions and not telling Mirror pension trustees that it no longer physically held investments managed on their behalf.

More than pounds 400m was looted by the late Robert Maxwell from the various pension funds under his control, much of it through fake stock-lending transactions in which assets were taken out of pension funds and pledged as collateral for further loans to private Maxwell companies.

John Morgan, chief executive of Imro, said yesterday that in Invesco's case 'there were strong reasons for thinking that they were aware that pension fund securities were not being used for the ostensible purpose of stock-lending transactions. If they had suspicions, they should have communicated them to us. There was a lack of openness.'

Invesco manages pounds 40bn for more than a million clients, and most of its business is now in the US. Charles Brady, the Florida-based executive who replaced Lord Stevens as chairman of Invesco MIM in April, welcomed Imro's announcement as 'a final judgement. The only remaining issue is the pounds 11m claim from the trustees of the Mirror Group pension fund. We want to move along and settle this claim as soon as possible. But we don't feel we're guilty. This (Maxwell) has become a national obsession.'

It also emerged yesterday that damages claimed by the Maxwell pension trustees against Invesco and four other institutions holding Maxwell-related assets total more than pounds 200m - higher than the pounds 88m previously thought. The original figure was claimed for misuse of pension assets; the new sum is for general mismanagement. Both Imro and the SIB privately want Invesco and the other institutions to avoid lengthy court action by settling quickly with the pensioners, through a 'restitution' to Sir John Cuckney's Maxwell pensioners' fund.

Colin Cornwall, independent chairman of the Mirror trustees, said yesterday: 'The trustees issued proceedings against Invesco MIM and four other institutions a year ago for the recovery of pounds 88m taken from the Mirror scheme. The hearing for our action against Invesco has been fixed for January 1994. We have always been confident our actions will succeed and our view is not affected by Imro's findings.'

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