Profits slump at Martin Currie after Chinese fraud case

Closing down its Chinese office following a scandal that resulted in an £8.6 million fine has wiped out nearly all of last year’s profits at Edinburgh-based investment house Martin Currie.

Funds under management fell to £8.1 billion from £11.1bn following the closure of the company’s Chinese business, which pushed turnover down to £65.5bn from £81.6bn.

The result was a collapse in pre-tax profits to £2.3m from £14.1m.

Last month regulators in the UK and the US imposed the £8.6m fine on the firm following fraudulent use of client funds in China.

The company was found guilty of failing to manage a conflict of interest between two of its clients.

It wrongly advised a US mutual fund, the China Fund Inc, to invest £15m in a transaction that rescued a struggling Chinese hedge fund. Both funds were managed by Martin Currie’s Shanghai office.

The part of the fine imposed by the Financial Services Authority was the largest-ever handed down by the British regualtor in a case involving a conflict of interest.