The U.K. finance regulator has asked Threadneedle, the London-based investment unit of Ameriprise Financial Inc., to review its systems and controls after a $150 million trading fraud was attempted.
The Financial Services Authority asked the firm to review the effectiveness of its compliance system. Threadneedle isn’t under investigation, Christopher Hamilton, a spokesman for the regulator, said today.
Threadneedle said this week that it blocked a “suspicious attempted trade” in August 2011. The firm reported the matter to the City of London Police and dismissed the trader, spokeswoman Alison Jefferis said.
The trader is Vladimir Gersamia, according to a person familiar with the investigation. Gersamia, who formerly helped manage about $2 billion in emerging-market debt at Threadneedle, didn’t respond to calls to his mobile phone. He left the firm in September, according to the FSA’s register.
London police arrested a 32-year-old man as part of the investigation in October and a criminal investigation into “a suspected $150 million trading fraud” is pending, police said. The man arrested was George Urumov, formerly the London-based global head of fixed income at Otkritie Financial Corp., a brokerage part-owned by Russia’s VTB Group, another person familiar with the matter said. Urumov declined to comment.
Threadneedle said the attempted trade was stopped by its systems and there was no loss to its clients.
Otkritie spokesman Alexey Karakhan didn’t immediately respond to a phone call and e-mail seeking comment. The Financial Times previously reported the identities of the men.
Urumov is accused of defrauding Otkritie of $160 million through offshore transactions involving Argentine warrants, and for embezzling $23 million in bonuses meant for subordinates, according to court documents and lawyers in a London civil lawsuit.
In December, Urumov petitioned a London court successfully to unfreeze some of his assets to pay his legal fees and finish renovations on his home. The judge granted the release of 162,000 pounds ($257,000) from a Swiss bank and 200,000 pounds of other assets.
Urumov told Otkritie when he joined the bank in January 2011 that he would bring four colleagues with him from Knight Capital Group Inc. if they each received $5 million in “golden hellos,” the brokerage said in a civil lawsuit filed in London on Oct. 6. Instead, Urumov arranged for three payments, of $500,000, $750,000 and $1 million, and kept the remainder of the $25 million, according to the filing, the brokerage said.
While at Knight Capital, Urumov “built a successful franchise in less than 18 months, trading in excess of $100 billion of bonds,” Otkritie said in a statement announcing the hiring of Urumov and his team on Jan. 17.